Dope Inc. Britain's Opium War Against The World Israel larouche

by a U.S. Labor
Investigating 1

Britain’s Opium War ^against the U.S

DOPE, INC.

Britain's Opium War Against the U.S

by a U.S. Labor Party
Investigating Team
directed by

Konstandinos Kalimtgis
David Goldman
Jeffrey Steinberg

Contents

Dedication iii
Acknowledgments v
Introduction 1
Part I: History 7

Introduction 9

1. Britain's First Opium Wars 12

2. Palmerston's Fifth Column, USA 25

3. Britain's "Noble Experiment" 43

Part II: How the Drug Empire Works 57

Introduction 59

1. Banking and the World's Biggest Business 63

2. From Opium to Dirty Money 78

3. How the Drug Trade is Financed 83

4. Britain's Gold and Dirty Diamond Operations 92

5. Hong Kong: The World's Drug Capital 106

6. The Peking Connection 113

7. How the Royal Institute of International Affairs
Runs Drugs and Dirty Money 139

8. Canada: North America's Hong Kong 160

9. All in the Family: The Real Syndicate 175

Part III: Organized Crime 261

Introduction 263

1. The Bronfman Gang 269

2. The Kennedys: Organized Crime in the Government 289

3. Britain's Assassination Bureau: Permindex 301

4. Permindex Unveiled: Resorts International Intertel 321

5. The Jacobs Family's Emprise: Sports and Crime 330

6. The Philadelphia Story 344

Dedication

Lyndon H. LaRouche, Jr.

New York City
October 18,1978

It is with proper pride that we dedicate this book to the often-
unsung U.S. intelligence and law enforcement officers who have
so often, so obscurely, died or languished in undeserved impris¬
onment in the silent war of the United States against the British
monarchy's illegal drug traffic into our nation.

This book is published with special thanks to those intelligence
and law enforcement officials who have given us such extraordi¬
nary assistance in cross-checking facts in putting the story to¬
gether. These have included officials not only in the USA, but our
nation's French ally, and also patriots in Canada embittered
against what the Bronfmans and others have done to their nation
and our own.

It is no exaggeration to sum up the situation thus: the only
proper comparison for today's British drug traffic into the USA is
the British monarchy's 19th century Opium Wars against China.
There is more than a parallel. The same HongShang and other
banking interests that developed their wealth in the China opium
trade are involved in the financial side of the traffic against the
USA — aided by those leading elements of the Zionist Lobby
which have controlled organized crime in the USA and the Carib¬
bean since the early 1920s.

This is a calculated form of political warfare against the USA
by the British monarchy. Not only are the London-centered Cana¬
dian, Hong Kong, Singapore, and British West Indies financial in-

terests involved in pulling tens of billions out of the USA — our
biggest source of balance-of-payments losses — but this is a pre¬
calculated political warfare. The evil British intelligence exec¬
utive — and head of the Aristotle Society — Bertrand Russell pro¬
posed this use of drugs as political subversion back during the
1920s. Among Russell's most prominent collaborators in this
effort was Aldous Huxley, coordinator of the 1960s introduction of
psychedelic substances to U.S. youth.

The fight against illegal drugs and against the evil forces of
"decriminalization" is nothing less than a war against Britain, to
the purpose of saving our youth and our nation from the destruc¬
tion the British monarchy has projected for us.

Acknowledgments

Dope, Inc. was commissioned in September 1978 by U.S. Labor
Party National Chairman Lyndon H. LaRouche, Jr., and was
produced under his direction. At that time the Labor Party

launched an international campaign against organized crime and
drug traffic. As LaRouche has pointed out numerous times in the
pages of the Labor Party's newspaper. New Solidarity, the forces
that run the drug trade are the same forces that are now
unleashing every capability — including scenarios for thermo¬
nuclear war — to halt the emergence of a new monetary system
represented by the July 6 establishment of the European
Monetary System in Bremen, West Germany, a system founded

on the principles elaborated by LaRouche in his 1975 proposal for
an International Development Bank. An October 1978 statement
issued by LaRouche — "A National Strategy to Control Crime" —
formed the kernel of this book.

This book is the product of a 100-person combined research
team of the U.S. Labor Party in New York City, the Mexican
Labor Party in Mexico City, and the European Labor Party in
Wiesbaden, West Germany. The efforts of this team, since its
founding in January 1974 under the direction of Lyndon

LaRouche, drew the circle tighter around the perpetrators of
narcotics traffic over a period of years. The authors particularly
acknowledge the efforts of Marilyn James, Richard Schulman,
and Alfred Ross, whose research supplied the core of this book,
and the contributions of Kathy Burdman, Scott Thompson, Paul
Goldstein, Harald Hermann, Joseph Brewda, Roger Moore,
Michelle Steinberg, Peter Wyer, Karen Steinherz, and Peter

Ennis. Our appreciation also goes to Linda Frommer, the book's

v

editor, who accomplished the final stage of the manuscript's
completion.

The authors are unfortunately unable to thank by name the
many former and currently serving law enforcement officers of
several nations who took the greatest risk in coming forward with
information and experience to indict the most dangerous enemy
of all.

vi

Introduction

America is at war. For the first time since 1865, the battle¬

ground is not abroad, but on the streets and schools of American
cities. Casualties registered in the course of the conflict are

incomparably higher than at any other time in American history.
We are fighting for our lives, and in the most literal sense, for the
lives of our children. Until now, we have been losing.

The enemy's most deadly weapon is dope.

Unlike most wars, which force both combatants deeply into
debt, in this undeclared war the offensive power becomes

wealthier and wealthier, while the stupefied victim becomes

impoverished. In return for destroying the minds, and in many
cases the lives, of the 48 million Americans hit by this weapon,

the enemy exacts a payment of $50 billion in retail drug sales

alone in the United States, and $200 billion worldwide. That $200
billion, robbed from the world's productive sector, is the slush
fund for everything evil in the world, including political

terrorism — and including the murder of American Presidents.

There is not a parent, thinking over the destruction of a child,
who really believes that drug abuse is a self-inflicted crime.
Americans, no matter what else they have learned to tolerate,

believe that the advancement of the next generation is part of the
way things should be. If an entire generation of Americans is in
jeopardy of being lost, then someone has done this to them.

We will tell you precisely who has done this — who has the
ability to control the flow of dope from the mountains of the Far
East and the valleys of Colombia to American high schools, who
controls the banks which launder the $200 billion in take, who
puppeteers the crime syndicates in charge of retail distribution,

1

2

DOPE, INC.

and who corrupts our political life. It is the same people against
whom we fought the American Revolution, who set up the world
opium trade a century and a half ago, and who run it today: the
aristocratic and banking oligarchy of Great Britain..

Look into the motionless stupor of the mind of a youth who has
been sapped and destroyed by addiction. Incapable of reason,
incapable of thought, today's addicted youth lives for only one

thing: his "fix," his "high." Then consider the body count of

Britain's Opium War against the United States: Over 48 million
Americans, mostly between theages of 12 and 25 are officially
known by the Drug Enforcement Administration to be frequent

users of heroin, cocaine, and marijuana. Over one-fourth of the
American people are severely wounded or dead in a war the

country has not yet mobilized to fight.

The Drug Enforcement Administration has released these
statistics on drug use by Americans:

Heroin

500,000 daily users (other sources place this hardcore addict
figure at between 750,000 and 1 million)

4,000,000 occasional users

Cocaine

575,000 users between the ages of 12-17
4,500,000 users between the ages of 18-25

I, 000,000 users over the age of 25

Marijuana

II, 000,000 daily users
24,000,000 occasional users

These figures do not include that portion of the population
addicted to amphetamines, barbiturates, and hallucinogens. This
figure alone according to recent reports from the National
Institute of Drug Abuse constituted between 12 and 25 percent of
all patients admitted to federally funded drug clinics during 1977.
The last census taken of drug abuse in 1974, issued as a Report to
the President, calculated conservatively that close to one and a
half million Americans had "gotten into trouble"—been

INTRODUCTION

3

arrested, treated, or hospitalized — through the use of amphet¬
amines or barbiturates. When calculated for only youth of high
school age, the rate of amphetamine and barbiturate use was
four times as great as that of the adult population.

Since the inauguration of Jimmy Carter, whole categories of
drug abuse are no longer monitored. The computer system of the
Drug Enforcement Administration has been shut down. Behind
that action is the grim fact that many of Mr. Carter's domestic
policy advisors are on record as being committed to decrimin¬
alization of deadly drugs — beginning with marijuana. If such
policies go through, statistics will be meaningless: drug abuse
will treble within months of legalization. The $200 billion take for
the British drug traders will climb to $300 billion.

The world's biggest business

How is the $200 billion monstrosity of world drug revenues
hidden? In the most important way, it is not. The flow of
narcotics and dirty money is conducted in the full light of day, the
same way rum-running was conducted during Prohibition. Only
misdirection prevents the public from understanding who the
enemy is. Massive crimes are not hidden under cover of
darkness, but under the cover of an effective lie. The operative lie
in this case is "Free Enterprise."

When Sam Bronfman sold his rotgut to American mobsters,
supplied by the old British distillers and financed by the old
British banks, it was a matter of free enterprise: what the mob
did with it after it crossed the American border was of no concern
to him. When Meyer Lansky made his first heroin connection
with Britain's dope-trading Keswick family in Shanghai in 1920,
the sale was legal and in the light of day; what the mob did with
the heroin later was not the responsibility of Britain's Far East
traders.

Now, when the Hongkong and Shanghai Bank "launders" the
$10 billion annual flow of narcotics money through Hong Kong, is
it anything but a matter of "free enterprise" where their deposits
come from and their loans go? When the Bronfmans in Canada

4

DOPE, INC.

and the Jacobs family of Buffalo finance organized crime, is it

anything more than a "free enterprise" business relationship?

The entire army of the enemy was built, and functions, under the
open view of the public.

In fact, the chain of interlocking "free enterprise" relation¬
ships that describes the flow of drugs and dirty money in and out
of the United States only masks the type of conspiracies that
Americans see not in pulp thrillers, but in nightmares. We will
uncover these conspiracies, the spider's web of the British

monarchy — the Italian-surname organized crime syndicates,
London's Zionist-cover terrorist operation, the secrets of

Peking's dope-running foreign intelligence organization. We will
trace them all back to their common "mother," the great
aristocratic families of Britain.

With this report, you will see your enemy as he is, behind the
veils of misdirection, past the Hollywood parodies of organized
crime. We are now in sight of the day when we will turn the tide
against the dope warriors of Great Britain — by striking at the
head of the beast.

69 70 71 72 73 74

Year

Fig.l

The Rate of Increase in Marijuana Use in the USA

The above graph of confiscations of marijuana by federal enforcement agen¬
cies provides only a rough barometer of the accelerated increase of mari¬
juana smuggling into and use in the USA between 1969 and 1974. As is com¬
mon knowledge, from 1974 to the present, marijuana use has gone up at a
rate whose acceleration dwarfs that depicted above. In the past year alone,
"drug decriminalization" campaigning by British agents-of-influence in the
White House, and governors and Congressmen in the hip-pockets of Edgar
Bronfman and Meyer Lansky, has caused marijuana use to increase at an
astronomical rate.

PARTI

History
of Britain's
First Opium Wars

Introduction

This is the setting for what follows below: narcotics are
pouring in from abroad through a well-organized, efficient group
of smugglers. One-fifth of the population abuses drugs, an
epidemic surpassing any known since the Great Plagues. Not
only the poor, but the wealthy and the children of the wealthy
have succumbed. Within the nation, organized crime displays its
drug profits without shame, ruling local governments, and
threatening the integrity even of national government. None of
their opponents is safe from assassins, not even the chief of state.
Law enforcement is in shambles. The moral fiber of the nation
has deteriorated past the danger point.

And one of the leading dope-traffickers writes to his superiors
abroad, "As long as this country maintains its drug traffic, there
is not the slightest possibility that it will ever become a military
threat, since the habit saps the vitality of the nation." (1)

The description is familiar, but we are not writing of America
in 1978, but China in 1838, on the eve of the first Opium War, when
Great Britain landed troops to compel China to ingest the poison
distributed by British merchants.

9

10

DOPE, INC.

An American President lies dead of an assassin's bullet.
Corrupt members of the Cabinet cover the tracks leading to a
conspiracy, including the leading narcotics mobs, ethnic-based
secret societies, and a foreign government. The public does not
believe that the assassin acted alone, but the weight of the cover-
up, the silence of the leading press, and the deaths of witnesses
blur the trail from the public's view.

Was that the death of John F. Kennedy? It was also the death of
Abraham Lincoln.

During the last century, British finance protected by British
guns controlled the world narcotics traffic. The names of the
families and institutions are known to the history student:
Matheson, Keswick, Swire, Dent, Baring, and Rothschild;

Jardine Matheson, the Hongkong and Shanghai Bank, the
Chartered Bank, the Peninsular and Orient Steam Navigation

Company. Britain's array of intelligence fronts ran a worldwide
assassination bureau, operating through occult secret societies:
the Order of Zion, Mazzini's Mafia, the "Triads" or Societies of
Heaven in China.

Paging back over the records of the narcotics traffic and its
wake of corruption and murder, the most uncanny feature of the
opium-based Pax Britannica is how shamelessly, how publicly
the dope-runners operated. Opium trading, for the British, was
not a sordid backstreet business, but an honored instrument of
state policy, the mainstay of the Exchequer, the subject of
encomia from Britain's leading apostles of "Free Trade" —
Adam Smith, David Ricardo, Thomas Malthus, James Mill, and
John Stuart Mill. The poisoning of China, and later the post-Civil
War United States, did not lead to prison but to peerages. Great
sectors of the Far East became devoted to the growing of the
opium poppy, to the exclusion of food crops, to the extent that
scores of millions of people depended utterly on the growing,
distribution and consumption of drugs.

The Keswicks, Dents, Swires and Barings still control the
world flow of opiates from their stronghold in the British Crown
Colony of Hong Kong. Jardine Matheson, the Hongkong and
Shanghai Banking Corporation, and the Peninsular and Orient
Steam Navigation Company still control the channels of

HISTORY

11

production and distribution of the drugs from the Far East,
through the British dominion of Canada, into the United States.

By an uninterrupted chain of succession, the descendants of the
Triads, the Mafia, and the Order of Zion still promote drug

traffic, dirty money transfers, political corruption, and an
Assassination Bureau even more awesome than the conspiracy
that claimed Abraham Lincoln's life. Of course, the drug
revenues of this machine are no longer tallied in the published
accounts of the British Exchequer. But the leading installations
of the drug traffic are no more hidden than they were a hundred
years ago. From the Crown Colony of Hong Kong, the
"HongShang" Bank does what the Keswicks set it up to do:

provide centralized rediscounting facilities for the financing of
the drug trade. Even the surnames of senior management are the
same.

Even today, the grand old names of Prohibition liquor and

dope-running rouse the deep awareness of Americans:
Bronfman, Kennedy, Lansky. Are the denizens of the India opium
trade, of the Prohibition mob, imprisoned in the history books and
behind the movie screen? Not infrequently, the observer feels a
momentary lapse in time, and sees not a history book, but the
morning newspaper, not the late-night movie, but the evening
television newscast.

The story we have to tell happened twice. It first happened to
China, and now it is happening to the United States. Emphasizing
that neither the names nor the hangouts of the criminals have
changed, we begin by telling how it happened the first time.

_1

Britain's First Opium Wars

From 1715, when the British East India Company opened up its
first Far East office in the Chinese port city of Canton, it has been
official British Crown policy to foster mass-scale drug addiction
against targeted foreign populations in order to impose a state of
enforced backwardness and degradation, thereby maintaining
British political control and looting rights. While the methods
through which the British have conducted this Opium War policy
have shifted over the intervening 250 years, the commitment to
the proliferation of mind-destroying drugs has been unswerving.

It was the British Crown's categorical opposition to and hatred
for scientific and technological progress that led it to adopt an
Opium War policy during the last decade of the 18th century.
Having stifled the development of domestic manufacturing
dining the previous century, the British Crown found its treasury
rapidly being drained of silver reserves — the only payment the
Chinese Emperor would accept in exchange for silk, tea, and
other commodities Britain imported. To reverse the silver
exodus, which threatened to collapse the financial underpinnings

12

HISTORY

13

of the British Empire, King George III mandated the East India
Company to begin shipping large quantities of opium from
Bengal in the British Crown Colony of India into China. The dual
objective was to favorably alter the balance-of-payments deficit
and to foster drug addiction among China's mandarin class. By
the time of the American Revolution, East India Company opium
trafficking into China was officially reported to be at a scale 20
times the absolute limit of opium required for medical and
related use.

In a very direct sense, the Founding Fathers of the United
States fought the American Revolution against the British
Crown's opium policy.

* East India Company intelligence operative Adam Smith's
Wealth of Nations spelled out the colonial looting policy against
which the Founding Fathers rebelled. In that same document —
as part of the same scheme to defend the Empire — Smith
advocated a massive increase of East India Company opium
exporting into China. (2)

* The dirty money culled from that opium trade made up a
sizable portion of the war chest that financed Britain's
deployment of Hessian mercenaries into North America to
attempt to crush the rebellion.

* The "Secret Committee" of the East India Company — under
the direction of Lord Shelburne and company chairman George
Baring — coordinated British secret intelligence's campaign of
subversion and economic warfare against the newly constituted
American republic even before the ink had dried on the Treaty of
Paris (1783). (3)

After the American Revolution. Smith's call for a dramatic
increase in opium exporting into China was enacted with a
vengeance. From 1801 to 1820, official British figures placed the
opium trade at approximately 5,000 chests per year. By the late
1820s, a network of trading companies operating under overall
East India Company "market control" was founded to facilitate
the trade. Some of these British opium houses, including the
biggest, Jardine Matheson & Co. Ltd., maintain an active hand in
Far East heroin trafficking to this day.

The establishment of these trading companies — the core of

14

DOPE, INC.

Britain's Opium War infrastructure — fostered an epidemic-
scale increase in opium trafficking into China. By 1830-31, the

number of chests of opium brought into China increased fourfold

to 18,956 chests. In 1836, the figure exceeded 30,000 chests. In

financial terms, trade figures made available by both the British
and Chinese governments showed that between 1829-1840, a total
of 7 million silver dollars entered China, while 56 million silver
dollars were sucked out by the soaring opium trade. (4)

When the Chinese Emperor, confronted by a galloping drug
addiction crisis, tried to crack down on the British trading

companies and their dope smugglers, the British Crown went to
war.

In 1839, the Chinese Emperor appointed Lin Tse-hsu
Commissioner of Canton to lead a campaign against opium. Lin
launched a serious crackdown against the Triad gangs sponsored
by the British trading companies to smuggle the drugs out of the
"Factory" area into the pores of the communities. The Triad
Society, also known as the "Society of Heaven and Earth," was a
century-old feudalist religious cult that had been suppressed by
the Manchu Dynasty for its often violent opposition to the govern¬
ment's reform programs. The Triad group in Canton was profiled
and cultivated by Jesuit and Church of England missionaries and
recruited into the East India Company's opium trade by the early
19th century. (5)

When Lin moved to arrest one of the British nationals
employed through the opium merchant houses. Crown
Commissioner Capt. Charles Elliot intervened to protect the drug
smuggler with Her Majesty's fleet. And when Lin responded by
laying siege to the factory warehouses holding the tea shipments
about to sail for Britain until the merchants turned over their
opium stockpiles, Elliot assured the British drug pushers that the
Crown would take full responsibility for covering their losses.

The British Crown had its "casus belli." Matheson of the opium
house Jardine Matheson joyously wrote his partner Jardine —
then in London, conferring with Prime Minister Palmerston on
how to pursue the pending war with China:

. . . the Chinese have fallen into the snare of rendering

HISTORY

15

themselves directly liable to the Crown. To a close
observer, it would seem as if the whole of Elliot's career
was expressly designed to lead on the Chinese to commit
themselves, and produce a collision.

Matheson concluded the correspondence: "I suppose war with
China will be the next step." (6)

Indeed, on October 13, 1839, Palmerston sent a secret dispatch
to Elliot in Canton informing him that an expeditionary force
proceeding from India could be expected to reach Canton by
March, 1840. In a follow-up secret dispatch dated November 23,
Palmerston provided detailed instructions on how Elliot was to
proceed with negotiations with the Chinese — once they had been
defeated by the British fleet.

Palmerston's second dispatch was, in fact, modeled on a
memorandum authored by Jardine dated October 26, 1839, in
which the opium pusher demanded: 1) full legalization of opium
trade into China; 2) compensation for the opium stockpiles
confiscated by Lin to the tune of £2 million; and 3) territorial
sovereignty for the British Crown over several designated off¬
shore islands. In a simultaneous memorandum to the Prime
Minister, Jardine placed J&M's entire opium fleet at the disposal
of the Crown to pursue war against China. (7)

The Chinese forces, decimated by ten years of rampant opium

addiction within the Imperial Army, proved no match for the

British.

The British fleet arrived in force and laid siege in June of 1840.
While it encountered difficulties in Canton, its threat to the

northern cities, particularly Nanking, forced the Emperor to
terms. Painfully aware that any prolonged conflict would merely
strengthen Britain's bargaining position, he petitioned for a
treaty ending the war.

When Elliot forwarded to Palmerston a draft Treaty of Chuenpi
in 1841, the Prime Minister rejected it out of hand, replying,

"After all, our naval power is so strong that we can tell the
Emperor what we mean to hold, rather than what he should say
he would cede." Palmerston ordered Elliot to demand
"admission of opium into China as an article of lawful

16

DOPE, INC.

commerce," increased indemnity payment, and British access to
several additional Chinese ports. (8)

The Treaty of Nanking, signed in 1842, brought the British
Crown an incredible sum of $21 million in silver — as well as
extraterritorial control over the "free port" of Hong Kong —
which to this day is the capital of Britain's global drug-running.

The First Opium War defined the proliferation of and
profiteering from mind-destroying drugs as a cornerstone of
British Imperial policy. Anyone who doubts this fact need only
consider this policy statement issued by Lord Palmerston in a
January 1841 communique to Lord Auckland, then Governor
General of India:

The rivalship of European manufactures is fast excluding
our productions from the markets of Europe, and we must
unremittingly endeavor to find in other parts of the world
new vents for our industry (i.e., opium — ed.). . . If we
succeed in our China expedition, Abyssina, Arabia, the

countries of the Indus and the new markets of China will at
no distant period give us a most important extension to the
range of our foreign commerce. ... (9)

It is appropriate to conclude this summary profile of Britain's
first Opium War by quoting from the 15 th edition of the
Encyclopedia Britannica, published in 1977. What the brief
biographical sketch of Lin Tse-hsu — the leader of the Chinese
Emperor's fight to defeat British drugging of the Chinese

population — makes clear to the intelligent reader is that British
policy to this day has not changed one degree:

... he (Lin—ed.) did not comprehend the significance of
the British demands for free trade and international
equality, which were based on their concept of a

commercial empire. This concept was a radical challenge
to the Chinese world order, which knew only an empire and
subject peoples. ... In a famous letter to Queen Victoria,
written when he arrived in Canton, Lin aked if she would

allow the importation of such a poisonous substance into

HISTORY

17

her own country, and requested her to forbid her subjects
to bring it into his. Lin relied on aggressive moral tone;
meanwhile proceeding relentlessly against British
merchants, in a manner that could only insult their
government.

Britain's opium diplomacy

Not a dozen years would pass from the signing of the Treaty of
Nanking before the British Crown would precipitate its second
Opium War offensive against China, with similar disastrous
consequences for the Chinese and with similar monumental
profits for London's drug-pushers. Out of the second Opium War
(1858-1860), the British merchant banks and trading companies
established the Hongkong & Shanghai Corporation, which to this
day serves as the central clearinghouse for all Far Eastern
financial transactions relating to the black market in opium and
its heroin derivative.

Furthermore, with the joint British-French siege of Peking
during October 1860, the British completed the process of opening
up all of China. Lord Palmerston, the High Priest of the Scottish
Rites, had returned to the Prime Ministership in June 1859 to
launch the second war and thereby fulfill the "open China" policy
he had outlined 20 years earlier.

Like the 1840 invasion of Canton, the second Opium War was an
act of British imperial aggression — launched on the basis of the
first flimsy pretext that occurred. Just prior to his ordering of a
northern campaign against Peking (which permitted the British
to maintain uninterrupted opium trafficking even while a state of
war was underway), Lord Palmerston wrote to his close
collaborator Foreign Secretary Lord John Russell (grandfather
and guardian of the evil Lord Bertrand Russell). "We must in
some way or other make the Chinese repent of the outrage,"
wrote Palmerston, referring to the defeat suffered by a joint
British-French expeditionary force at Taku Forts in June 1859.
The expeditionary fleet, acting on orders to seize the forts, had
run aground in the mud-bogged harbor and several hundred

IB

DOPE, INC.

sailors attempting to wade to shore through the mud were either
killed or captured. "We might send a military-naval force to
attack and occupy Peking," Palmerston continued. (10)
Following Palmerston's lead. The Times of London let loose a
bloodcurdling propaganda campaign:

England, with France, or England without France if
necessary. . . shall teach such a lesson to these perfidious
hordes that the name of Europe will hereafter be a pass¬
port of fear, if it cannot be of love throughout their
land. (11)

In October 1860 the joint British-French expeditionary force
laid siege to Peking. The city fell within a day with almost no
resistance. Despite French protests, British commander Lord
Elgin ordered the temples and other sacred shrines in the city
sacked and burned to the ground — as a show of Britain's
absolute contempt for the Chinese.

Within four years of the signing of the Treaty of Tientsin
(October 25, 1860), Britain was in control of seven eighths of the
vastly expanded trade into China. This trade amounted to over
£20 million in 1864 alone. Over the next 20 years, the total opium
export from India — the overwhelming majority of which was
still funneled into China — skyrocketed from 58,681 chests in 1860
to 105,508 chests in 1880. (12)

. Furthermore, the opening of China prompted the British opium
traders to diversify into "legitimate business." The opium firms
opened cotton traffic into China — to the point that cotton cloth
shipments into China (like the opium shipments) quadrupled
from 1856-1880 from 115 million yards of cloth to 448 million yards.

The London opium traffickers' diversification into the cotton
trade at the close of the second Opium War intersected with the
same London oligarchy's shifting of its principal strategic policy
focus to the destruction of the United States — beginning with the
efforts to wreck the republic via the British-sponsored Civil War.
The massive expansion of cotton exporting was undertaken with
full knowledge that U.S. cotton production — centered in the

HISTORY

19

Deep South slavocracy — would be severely disrupted with the
pending "civil war" destabilization in North America. (13)

The slave and cotton trade in the South was run to a significant
degree by the same Scottish-based families that also ran the
opium traffic in the orient. The Sutherland family, which was one
of the largest slave and cotton traders in the South, were first
cousins of the Matheson family of Jardine Matheson. The
Barings, who founded the Peninsular & Orient Steamship Line
heavily involved in the opium trade, had been the largest
investors in U.S. clipper shipping from the time of the American
Revolution. The Rothschild family as well as their later "Our
Crowd" New York Jewish banking cousins, the Lehmans of

Lehman Bros., all made their initial entry into the United States
through the pre-Civil War cotton and slave trade.

In the case of the U.S. Civil War, the British opium traffickers
bet on the loser. By the mid-1860s, cotton goods from the southern
United States were back on the international markets, triggering
waves of bankruptcies among London speculators who bet on
dramatic inflation in the prices of Indian and Egyptian cotton. As
in the period immediately following Britain's loss of its American
colonies during 1776-87, the oligarchy turned to an expanded
opium traffic to paste over the losses.

To facilitate the planned expansion of the opium trade, the

British banking and merchant circle founded the Hongkong &

Shanghai Corporation in 1864. Almost simultaneously, the
Matheson family founded Rio Tinto (now Rio Tinto Zinc), a tin
mining venture in Spain which soon began shipping these ores as
a method of payment for the opium.

Who founded the Hongkong and Shanghai Corporation? The

same circle of merchant banking, trading, and shipping families
— centered around the British monarchy — who opened the East
India Company's opium trade as an instrument of British state
policy during the previous century.

The following points summarize British Opium War policy
against China through the 19th century:

* Open sponsorship of mass-scale opium addiction of targeted
colonial and neocolonial populations by the British Crown;

20

DOPE, INC.

* Willingness of Her Majesty's government to deploy military
force up to and including full-scale conventional warfare in
support of the opium trade;

* Build-up of an allied terrorist and organized criminal infra¬
structure employing revenues gained from opium trade and
related black market activities.

Protecting the opium market

Even through the early decades of the present century, Britain
retained an open diplomatic posture on behalf of unrestricted
drug profiteering.

In 1911, an international conference on the narcotics problem
was held at The Hague. The conference participants agreed to
regulate the narcotics trade, with the goal in mind of eventual
total suppression. The success of the Hague Convention, as it
was called, depended on strict enforcement of the earlier Anglo-
Chinese agreement of 1905. Under that agreement, the Chinese
were to reduce domestic opium production, while the British
were to reduce their exports to China from British India
correspondingly.

The Chinese, who had subscribed enthusiastically to both the
1905 and 1911 protocols, soon discovered that the British were
completely evading both by sending their opium to their extra¬
territorial bases, Hong Kong and Shanghai. Opium dens in the
Shanghai International Settlement jumped from 87 licensed dens
in 1911 at the time of the Hague Convention to 663 dens in

1914! (14) In addition to the trafficking internal to Shanghai, the
Triads and related British sponsored organized crime networks
within China redoubled smuggling operations — conveniently
based out of the warehouses of Shanghai.

If anything, British profiteering from the opium trade jumped

as the result of the reversion to a totally black-market

production-distribution cycle. Ironically, the legalization of the

opium trade into China forced upon the Emperor through the
Opium Wars had cut into British profits on the drug. Legalization
had brought with it the requirement that the British opium

HISTORY

21

merchants pay import duties, an overhead they did not have to

absorb when the drug trade was illegal.

In yet another act of contempt for the Hague Convention,

Britain issued a major new loan to Persia in 1911. The collateral
on that loan was Persia's opium revenues. (15)

Even with the post-Versailles creation of the League of
Nations, Britain flaunted its drug trafficking before the world

community. During this period. Her Majesty's opium trafficking
was so widely known that even the Anglophile U.S. news weekly

The Nation ran a series of documentary reports highly critical of
the British role. (16)

At the Fifth Session of the League of Nations Opium
Committee, one delegate demanded that the British government

account for the fact that there were vast discrepancies between

the official figures on opium shipments into Japan released by

the Japanese and British governments. The British claimed only
negligible shipments, all earmarked for medical use, during the
1916-1920 period; while the Japanese figures showed a thriving

British traffic. When confronted with this discrepancy as prima

facie evidence of large-scale British black market smuggling of
opium into Japan, the British delegate argued that such black

marketeering merely proved the case for creating a government

owned opium monopoly.

As late as 1927, official British statistics showed that

government opium revenues — excluding the far more expansive
black market figures — accounted for significant percentages of
total revenue in all of the major Far East Crown colonies. (17)

British North Borneo
Federated Malay States
Sarawak

Straits Settlements
Confederated Malay

In India as well, official Crown
the opium market. According to
when Gandhi began agitating against

23 percent
14 percent
18 percent
37 percent
28 percent

policy centered on protection for
one recently published account,
opium in 1921

22

DOPE, INC.

. . . his followers were arrested on charges of "under¬

mining the revenue." So little concerned were the British
about the views of the League of Nations that after a
commission under Lord lnchcape had investigated India's
finances in 1923, its report, while recognizing that it might
be necessary to reduce opium production again if prices
fell, went on to warn against diminishing the cultivated
area, because of the need to safeguard "this most
important source of revenue."

. . . while the British Government was professing to be

taking measures to reduce consumption of opium and
hemp drugs, its agents in India were in fact busy pushing
sales in order to increase the colony's revenues. (18)

Lord lnchcape — who chaired the India Commission which
endorsed continued opium production in British India — was a
direct descendant of the Lord lnchcape who during the previous
century founded the Peninsular & Orient Steamship Line and
subsequently helped found HongShang as the clearinghouse bank
for opium trade. Through to the present, a Lord lnchcape sits on
the boards of P & 0 and the HongShang.

In 1923, the British-run opium black market represented such a
seriously perceived international problem that Representative
Stephen Porter, Chairman of the U.S. House of Representatives
Foreign Affairs Committee, introduced and passed a bill through
Congress calling for country-by-country production and import
quotas to be set on opium that would reduce con¬
sumption to approximately 10 percent of then-current levels.
The 10 percent figure represented generally accepted levels of
necessary medical consumption.

Porter's proposal was brought before the League of Nations
Opium Committee — where it was publicly fought by the British
representative. The British delegate drafted an amendment to
Porter's plan which called for increased quotas to account for
"legitimate opium consumption" beyond the medical usage. This
referred to the massive addict population in British colonies and
spheres of influence (predominantly in Asia) where no

HISTORY

23

regulations restricted opium use. The enraged U.S. and Chinese
delegations led a walkout of the plenipotentiary session; the
British rubberstamped the creation of a Central Narcotics Board
designated with authority to gather information and nothing
more; and the journalists stationed in Geneva henceforth
referred to what remained of the Committee as the "Smugglers
Reunion." (19)

A chest of opium in 1820 sold for $2,075 on arrival at the port of Canton.
While this figure tended to drop marginally as the volume of traffic in¬
creased after 1830, any calculation of cash valuation of the opium trade into
China establishes a figure that very nearly parallels "the present $100-200
billion (when appropriate calculations are made to account for differences
in purchasing power of the dollar in ratio to total volume of world produc¬
tion) in annual "black" revenues.

2

Palmerston's Fifth Column,
USA

The assassination bureau

Narcotics traffic was the business of organized crime during
the 19th century no less than in the 20th, and Britain's Opium War
cabinet spun out a web of criminal connections that crisscrossed
the globe. Prime Minister Palmerston conducted, the opium
business behind a screen of respectability, in full public view.
What remained hidden — until the report of the Military
Commission that heard evidence on the Lincoln Assassination —
was the importance of Palmerston's secret life, as Patriarch of
the Scottish Rite of Freemasonry.

It does not surprise the modern student that the perpetrators of
the narcotics traffic show up in every element of the dirty side of
19th century politics, including presidential assassinations.
But the extent of the web of criminal networks put in place by
Palmerston could have come out of a Gothic horror story, Amer¬
ican counterintelligence specialists of the time, such as Edgar
Allan Poe and Samuel Morse (1), knew the problem well.

Palmerston's irregulars, employed in illegal dope trafficking.

25

26

DOPE, INC.

assassinations, and "Fifth Column" subversions against the
United States in the period before and during the Civil War, are
the linear ancestors of what is now called organized crime. The
Chinese "Triads," or Societies of Heaven; the Order of Zion and
its American spinoff, the B'nai B'rith; "Young Italy," whose
Sicilian law enforcement arm became known as the Mafia; the
Jesuit Order based in decaying Hapsburg Austria; Mikhail
Bakunin's bomb-throwing anarchist gangs; and nearly every
other inhabitant of Britain's political netherworld followed a
chain of command that led through the Scottish Rite of
Freemasonry directly to Lord Palmerston and his successors.

The model for the Scottish Rite operation is the ethnic secret
society — Jewish, Italian, or Chinese. Closest to hand among
Palmerston's agencies was the Order of Zion, a highly
specialized dirty tricks operation founded by London-based
Hofjuden ("Court Jew") families, whose close ties to the
British oligarchy traced back to the founding of the Bank of
England, and before that to an alliance with the piratical
financiers of post-Renaissance Genoa. The names of these
families will appear and re-appear throughout this report,
including the Mocattas and Goldsmids, gold dealers in London
before even the Bank of England was there, now the operators of
one of the world's most sophisticated money-laundering devices;
the Montefiores, now central figures in the modern Most
Venerable Order of St. John of Jerusalem; and the de Hirsch
family, whose tightly controlled colonization program for Jews in
Canada brought the present leaders of organized crime to the
New World.

Control over the Order of Zion rested in the British Board of
Deputies, founded in 1763 and still in action. One of the board's
earliest presidents was Sir Moses Montefiore, described in
contemporary accounts as "Queen Victoria's favorite Jew." (2)
When Montefiore took command of the board in 1835, its dirty
tricks division, the Order of Zion, was on the verge of launching
the covert campaign that would lead to both the Lincoln
assassination, and the founding of organized crime, so-called, in
the United States. Through the efforts of Montefiore, later Prime
Minister Benjamin Disraeli (the Earl of Beaconsfield), and the

HISTORY

27

then nouveau riche Rothschilds, the Order of Zion nursed into
being the leadership of the Confederacy.

Their starting point was the 1843 founding of the B'nai B'rith,
also called the Constitutional Grand Lodge of the Order of the
Sons of the Covenant, as a recognized branch of the Scottish Rite
for American Jews. B'nai B'rith's first headquarters were at 450
Grand Street in Manhattan, at the house of Joseph Seligman, the
wealthy "dry goods" merchant. (3) Seligman, whose name
survives on Wall Street along with such of his contemporaries as
August Belmont, Loeb, Schiff, and Lazard, was allied to the
cotton-trading British oligarchy.

B'nai B'rith was a straightforward covert intelligence front for
the Montefiores and Rothschilds. Its American house organ, the
Menorah, could not disguise its relationship to the Rothschilds. It
chose to flaunt it:

"The name Rothschild, in all countries is a synonym for honor
and generosity, and no name in Europe has a popularity so great
and so well merited. The Rothschilds in France occupy a social
position even higher than that of the English branch of the

family." (4)

The Menorah was also frank on the subject of the B'nai B'rith's
relationship to the Scottish Rite Freemasons:

"Their reunions were frequent and several of them being
members of then existing secret benevolent societies and
especially of the Order of the Free Masons, and Odd Fellows,
they finally concluded that a somewhat similar organization, but
based upon the Jewish idea, would best obtain their object." (5)

Once in operation, the B'nai B'rith effectively merged its

operations with another branch of the Scottish Rite, based in the
Midwest and South — the Knights of the Golden Circle, the fore¬
runner of the Ku Klux Klan, the training ground for the entire
Confederate military and political leadership. (6) Its most

important American operative was Judah P. Benjamin, a British
subject and leader of the B'nai B'rith, whose amazing career

included a brief term as Confederate Secretary of War and then
Secretary of State, during the closing phases of the Civil War. (7)
Another British subversive agent later worked together with
Benjamin to found the Ku Klux Klan. He was Dr. Kuttner

28

DOPE, INC.

Baruch, B'nai B'rith leader and grandfather of Bernard Baruch,
a leading Wall Street Anglophile. (8) Their colleagues in that
venture included Confederate General Albert Pike, a Grand
Commander of the Scottish Rite, and a Jesuit priest. (9) The
same group carried out the Lincoln assassination — which raises
questions concerning the Defense Department's refusal to
release secret files concerning that assassination. Are they
afraid to embarrass the now politically powerful B'nai B'rith?

The B'nai B'rith and its Confederate opposite numbers, the
Knights of the Golden Circle and the Ku Klux Klan, were only
three of the many parallel operations that Palmerston brought to
life during the 1860s. In Britain, future Prime Minister Disraeli,
the man who evaded debtors' prison through the help of the
House of Rothschild, launched the "Young Englanders." (10) In
Italy, the local leader of the Scottish Rite, Mazzini, organized and
commanded "Young Italy." (11) Scottish Rite member and
Rothschild agent Alexander Herzen initiated a similar group
covertly, avoiding the watchful eyes of the Czarist secret police;
his best-known protege took the name Bakunin. (12) In China, as
of the second Opium War, the long-established "Triad" secret
societies had already taken the retail distribution franchise for
the distribution of British opium imported from India, and had
become an uncontrollable, paramilitary arm of British "free
trade."

What Palmerston and his colleagues had at their disposal was
an International Assassination Bureau, capable of eliminating
any chief of state who resisted British policy objectives. Not
much different from the Red Brigades of Italy or the Baader-
Meinhof terrorists of Germany today, the Scottish Rite's rainbow
gathering of secret societies took money from the narcotics
traffic and orders from Lord Palmerston.

What must be judged, in the long run, as the most deadly of
these organizations was organized on an international footing at
the same time that B'nai B'rith appeared in the United States.
Disraeli, Moses Montefiore, and other leading British Hofjuden
founded a new masonic-style order called, in the original French,
the "Alliance Universelle Israelite." It became known — and
feared — under the name of its elite secret arm, the Order of

HISTORY

29

Zion. (13) Most of the Order of Zion's funding was provided
through the London and Paris banking houses of Rothschild,
Montefiore, and de Hirsch. In crucial respects, the Order of Zion
and Palmerston's Scottish Rite of Freemasonry were
indistinguishable. In France, for example, the head of both
organizations was the same individual, Adolphe Isaac
Cremieux. (14)

Order of Zion leader Judah P. Benjamin was the individual who
gave the order for Lincoln's assassination, according to the one
authoritative historical document in the public domain, the
report of the Judge Advocate assigned to investigate the
assassination and report to the Military Commission
responsible. (15) The report cites the orders of Confederate
President Jefferson Davis and Judah Benjamin. According to
this document. Confederate secret intelligence had raised a dirty
tricks slush fund of $649,000 through the sale of Confederate bonds
in Liverpool. At the time, the headquarters of this outfit, called
the Secret Cabinet, were housed in St. Lawrence Hall in Montreal

— in the same building occupied by the Commander in Chief of

British forces in Canada, General Sir Fenwick Williams. (16)
The report names George N. Sandis as the group's money mover;
Sandis was an American citizen, formerly an advisor to
Democratic presidential candidate Stephen Douglas, and Consul
of the United States in Liverpool under the Pierce Admin¬
istration.

Eight days before Lincoln's death, the chief of the Secret
Cabinet — former Interior Secretary in the Buchanan
Administration, Jacob Thompson — withdrew $180,000 from the
group's account at the Bank of Montreal in Montreal, to set the
murder plot in motion. (17) His courier was one John Harrison
Suratt, a British agent trained at Jesuit Georgetown College.
Neither Thompson nor Benjamin was ever apprehended; both
fled to England and remained there under the Crown's

protection. (18) This evidence, heard on June 25 and June 26,
1865, ran up against a cover-up effort under the direction of
Secretary of War Edward Stanton that compares in audacity

with the work of the 1963 Warren Commission. The relevant raw
documentary is not available to researchers. The documents

30

DOPE, INC.

relating to the Lincoln assassination are still locked up in the
archives of the Defense Department. Jefferson Davis, who lived
comfortably in Montreal after the collapse of the Confederacy,
kept his papers in the Bank of Montreal, the same bank that
conduited the funds for the assassination itself. If they are still in
the vaults of the Bank of Montreal, the bank has not
acknowledged this. (19)

These facts concerning the death of President Lincoln are more
than a useful case history, illustrating the power of the dope
trade's criminal networks. If the leads developed in New Orleans
District Attorney Garrison's investigation of the Kennedy
assassination were accurate, the two murders were the work of
the same operation. All that is necessary is to cross out the names
"Secret Cabinet" and "Judah Benjamin," and write in:

Permindex and Major Louis Bloomfield (see Part III, Section 3).

From what remains of the official record, there is no question
that the death of Abraham Lincoln was traced to British-
controlled and British-funded networks by American military
intelligence. It must be underscored that much more than the
central figure of Lord Palmerston brought these networks into
the mainline of the narcotics traffic. Southern cotton, for which
the British verged on invading the United States during the Civil

War (20), was not merely a facet of the same trading operation

that produced the dope trade; for all purposes, it was the dope

trade. Opium was the final stage in the demand cycle for British-
financed and slave-produced cotton. British firms brought cotton
to Liverpool. From there, it was spun and worked up into cloth in
mills in the north of England, employing unskilled child and
female labor at extremely low wages. The finished cotton goods
were then exported to India, in a process that destroyed the
existing cloth industry, causing widespread privation. India paid
for its imported cloth (and railway cars to carry the cloth, and
other British goods) with the proceeds of Bengali opium exports
to China. Without the "final demand" of Chinese opium sales, the
entire world structure of British trade would have collapsed.
Palmerston's above-cited remark concerning the future of
British trade in opium-consuming China and other parts of the
East was, in fact, a matter of hard contingency.

HISTORY

31

Britain's new instrument of subversion in the United States
was controlled elements of Italian and Chinese immigration,
combined with the Order of Zion entity that had been in place
since 1843. By the turn of the century, the different ethnic
networks became so intertwined that, for generic purposes, the
name "organized crime" applies to all of them.

The implantation of the ethnic secret societies into the United
States is a complex story, but may be centered accurately in a
few case histories. One is the way that the family of Sam
Bronfman — the man who shipped enough liquor to the United
States to double the size of Lake Erie, in the testimony of Lucky
Luciano — got to North America. Bronfman's story begins, in
fact, in Romania, where the Order of Zion secret organization
achieved its first major victory, a coup d'etat that brought King
Charles of Romania to the throne in 1887. In the years following
the Civil War, the Order of Zion merged with the much older Cult
of Mizraem, a centuries-old covert organization that dated back
to the days of Genoese and Hapsburg intrigue and assassina¬
tion. (21) From the British side. Sir Moses Montefiore, and on the
Romanian front itself, American Consul Benjamin Peixotto,
aided the local secret society in installing a new monarch. (22)
Peixotto held a leadership position in the American B'nai B'rith
and was a member of the Order of Zion.

The Elders of Zion

Romania became, in consequence, a nesting place for the most
lurid form of Central European covert operations until the
Second World War. The character of the political machine the
Order of Zion installed in that country is perhaps best illustrated
by the strong support Order of Zion elements gave to the
Romanian Green Shirt Nazis, who seized power in Hitler's wake
during the 1930s. (23) Romanian Jews show up prominently in
American organized crime, as well as in the terrorist activities of
the Israeli secret service, the Moss ad.

The Order of Zion was simply the Jewish division of the Most
Venerable Order of St. John of Jerusalem, the London-centered

32

DOPE, INC.

chivalric order and secret society, whose members swear — and
act on — a blood oath. A secret meeting in Paris in 1884 yielded
the famous minutes of the Order, published under the title.
Protocols of the Elders of Zion. The minutes were intercepted
and published by the Russian counterintelligence service, the
Okhrana. (24) Probably, the decision to publish the captured
minutes involved retaliation against the Order of Zion's role in
fomenting a sweeping destabilization against the government of
Russian Prime Minister Count Witte, whose government fell
dining the so-called 1905 Revolution. Witte had sought an alliance
with Germany and France against Britain on a program that
included the industrial development of Russia. The question of
the authenticity of the Protocols has been a matter of fierce,
even hysterical dispute. The question may be settled with dis¬
patch by a textual comparison between the oaths of the Order of
Zion printed in the Protocols, and the blood-curdling oaths
sworn by initiates into the fourth Grade of the Knights of
Columbus of Mexico, which maintains close ties to the Jesuits
and to the Order of St. John of Jerusalem, which reads in part as
follows: (25)

I,_ , in the presence of all-powerful God, the

blessed Virgin Mary, the blessed St. John the Baptist . . .
by the belly of the Virgin Mary, the womb of God and staff
of Jesus Christ, I declare and swear that his holiness the
Pope is vice regent of Christ and sole and true head of the
universal Catholic Church on earth, and in virtue of the

keys to do and undo given to your holiness by my savior
Jesus Christ, (you) have the power to depose kings and
heretics, princes, states, communities and governments

and dismiss them from office without risk. . . .

I promise and declare that I will, when the opportunity
presents itself to me, wage war without quarter, secretly or
openly, against all the heretics, Protestant and Mason,
such as I may be ordered to do, in order to extirpate them

from the face of earth, and I will not take into account

either age, sex or station, and I will hang, burn, strangle
and bury alive those infamous heretics: I will cut open the

HISTORY

33

stomachs and wombs of their women and smash the heads
of the babies against the rocks and walls, in order to
annihilate the execrable race; that when this cannot be
done openly, I will secretly employ the poison cut,
strangulation, the sword, dagger or bullet, without
consideration for the honor, rank, dignity or authority of
the persons, whatever their status in public or private life
may be, such as I may be ordered at any time. . . .

If I manifest falsity or weakness in my determination, I
consent that my brothers and comrade soldiers in the army

of the Pope may cut off my hands, my feet and slit my
throat from ear to ear.. . .

I promise to execute and fulfill this oath, in testimony
whereof, I take this sacred sacrament of the Eucharist and
affirm it even with my name written with the point of this
dagger, drenched in my own blood and sealed in the
presence of this holy sacrament. Amen. (26)

Romania's Order of Zion stronghold produced, among other
criminal elements, one Yechiel Bronfman, who emigrated to
Canada in 1889. The circumstances of Bronfman's emigration are
noteworthy. His passage was paid by the de Hirsch family fund

for settlements in Canada — which conferred benefits with
strings attached. De Hirsch political screening of new
immigrants was so precise that a significant number of new

arrivals were sent back without funds, for unreliability. (27).

The important features of the arrival of the Italian "Mafia" in
the United States are inseparable from the story of the Order of
Zion. Mazzini, the sponsor of the Mafia in Italy, reported directly
to the most prominent of Britain's Hofjuden, Prime Minister
Benjamin Disraeli, and received funding from the leading British
Hofjuden bankers, Rothschild and Montefiore. (28)
Correspondingly, when Mazzini sent his lieutenants into the
United States, the veterans of the "Young Italy" movement

moved into channels already carved out by the likes of ex-
General Pike and B'nai B'rith. The combination of Hofjuden-
controlled crime networks and the Mafia provided the frame¬
work for organized crime on a big-business scale.

34

DOPE, INC.

Mazzini's mafia

The first arrivals of the Italian-speaking mob followed the
tracks of the original "dry goods" merchants who figured so

prominently in the B'nai B'rith, the grandfathers and fathers of

the Our Crowd banking group in New York City. New Orleans,
the first base of the Lehmans and Lazards in the United States,
also became the receiving station for the Mazzini networks. Most
important, the first recorded evidence of organized Mafioso
activity in the United States identifies the Mazzini networks with
General Pike's guerrilla war against the "Reconstruction" South.

Nothing depicts this arrangement better than the stories of the
first New Orleans godfathers, Joseph Macheca and Charles
Matrenga. Proteges of Mazzini, they took over the New Orleans
franchise on behalf of the Palermo mob, which reported to
Mazzini and thence to Disraeli. The chain of command was so

well known that the joke made the rounds that the word "mafia"
was really an acronym for "Mazzini autorizza furti, incendi, e
attentati" — "Mazzini authorizes theft, arson, and
kidnapping." (29) The first of the Mazzini networks drifted in
before and during the Civil War. "The Mafias in New Orleans,
New York, and Palermo were separate societies," wrote one
leading historian of the period, "but they cooperated closely. A

member who was properly sponsored could be transferred from
one city to another, from one family to another." (30)

By the close of the Civil War, Disraeli's Mafia was in the hands
of one Joseph Macheca. By contemporary accounts, the
activities of the Macheca gang were indistinguishable from those
of the Klan. In 1868, Macheca organized the New Orleans side of
Democratic candidate Seymour's campaign against Ulysses S.
Grant. Seymour's funding and political direction came from
August Belmont, the Rothschilds' official business agent in the
United States. The campaign, such as it was, was described as
follows in the New Orleans Picayune:

This popular and pleasant-mannered gentleman
(Macheca) organized and commanded a company of
Sicilians, 150 strong, known as the Innocents. Their

HISTORY

35

uniform was a white cape bearing a Maltese Cross (the
insignia of the British Royal Family's Order of St. John of
Jerusalem — ed.) on the left shoulder. They wore sidearms
and when they marched the streets they shot at every
Negro that came in sight. They left a trail of a dozen dead
Negroes behind them. General James E. Steadman,
managing the (Seymour) campaign, forbade them from
making further parades and they were disbanded. (31)

One historian of the Mafia notes, "This matter-of-fact account
is the first report of a formal Sicilian organization in New
Orleans, and it is likely that from the ranks of these armed
Innocents came the nucleus of Macheca's Mafia." (32)

Belmont's presidential candidate ran on a program drafted at
the Seligman and associated Our Crowd banking houses in
New York: the repeal of Lincoln's Emancipation Proclamation.
The same cousins of the British Hofjuden controlled General Pike
and his hooded goons, the Ku Klux Klan, whom Macheca's
gangsters took such great pains to imitate — along with the
conceit of the Maltese Cross. Pike, Macheca, and their para¬

military irregulars unleashed a wave of violence across the South
that buried Lincoln's Reconstruction policy not many years after
the President himself.

The historical record shows that Macheca's group in New

Orleans, which started out by shooting blacks for the copperhead
Our Crowd banks in New York, had proved its mettle by the
early 1870s. It became the jumping-off point for the organization
of the mob throughout the United States. Macheca provided a

base for Mazzini's syndicate organizer of the first years of the
Mafia, Giuseppe Esposito. A close Mazzini associate, Esposito
fled Sicily in the early 1870s, arriving in New Orleans to make
contact with Macheca. Esposito traveled through the United

States, pulling together Italian-speaking secret societies and

establishing inter-city communications where none had existed
before. From Esposito's tour onwards, the Sicilian-speaking

secret societies became crime syndicates. Mazzini's representa¬
tive on the scene had absolute authority over the local god¬

fathers, even over the leader of the New Orleans base organiza-

36

DOPE, INC.

tion. Macheca's "Mafia leadership was eclipsed briefly,"
according to one historian, "from 1879 to 1881, when he
temporarily deferred to Giuseppi Esposito." (33)

Macheca died at the hands of a New Orleans mob, which
dragged him from a prison cell and lynched him, after he had
been arrested for the murder of a policeman. (34) His old
lieutenant Matrenga took over the reins. Macheca's death left a
deep impression on the syndicates; possibly this is the point
where the mob decided to "go legit," its strategy ever since. In
order to do so, the Matrenga gang turned back to the Hofjuden.

The vehicle for the New Orleans mob's conversion to
"legitimate business" in 1900 was another Romanian Jew, an
immigrant from the Romanian province of Bessarabia, whence
Yechiel Bronfman had migrated to Canada some ten years
earlier. The new immigrant, one Samuel Zemurray, obtained
financing from a group of Boston and New York Our Crowd
banks, and bought out a portion of the Macheca gang's shipping
interests. A historian comments, "Joe Macheca's shipping line
merged with four others to form the great United Fruit Company,
which remains one of the largest of all U.S. firms." (35) United
Fruit — rechartered recently as United Brands Company —
traditionally brought in Our Crowd bankers for its top manage¬
ment. Nonetheless, the Sicilian mob was remembered with
nostalgia. When Charles Matrenga died in 1943, the entire board
of United Fruit turned out for the funeral. (36)

From these most prominent among the Jewish and Italian
ethnic crime stories of the formative years of the American
syndicates, the roots of the narcotics traffic and associated evils
are already evident. The Bronfmans, we will document later,
founded and bankrolled the modern-day Murder Incorporated,
Permindex, the firm that police agencies in the United States and
Europe have suspected of organizing the murders of John F.
Kennedy, Italian oil magnate Enrico Mattei, and former Italian
premier Aldo Moro, as well as the many attempts on the life of
Charles de Gaulle. It was in New Orleans that District Attorney
Garrison linked the remnants of the old Macheca mob to the
events in Dallas in November 1963.

As old Charles Matrenga withdrew into a "legitimate" back-

HISTORY

37

ground, the day-to-day operations of the New Orleans mob fell
into the hands of Sylvestro Carolla, who, in turn, passed the god¬
father's mantel onto Carlos Marcello in the early 1950s. What had
begun as a small secret cult, receiving direction from the London
center of the Scottish Rite of Freemasonry and Prime Minister
Disraeli's Order of Zion, had spread across the American South,
the Caribbean, and Central America. It maintained close ties
with Meyer Lansky and the British installations in the West
Indies.

And, according to sources in the Drug Enforcement
Administration, 20 percent of cocaine smuggled into the United
States arrives on the ships of United Brands.

The Chinese entry

Opium and morphine, in the early days of the mob, were not

illegal drugs; heroin only came into circulation at the turn of the

century and was not made illegal as a prescription drug until
1924. But the British dope-runners had a direct hand in the
infiltration of narcotics into the United States, through the third
wave of crime-tainted immigration, from China.

Not coincidentally, the first large-scale importing of opium into
the United States commenced with the "coolie trade," referred to
by its British Hong Kong and Shanghai sponsors as the "pig
trade." Even before the Civil War, the same British trading

companies behind the slave trade into the South were running a
fantastic market in Chinese indentured servants into the West
Coast. In 1846 alone, 117,000 coolies were brought into the
country, feeding an opium trade estimated at nearly 230,000
pounds of gum opium and over 53,000 pounds of prepared
(smoking) opium. (37) Although Lincoln outlawed the coolie
trade in 1862, the black marketeering in Chinese (the term
"Shanghaied" referred to the merchant company kidnapping —

through the Triad Society — of impoverished and often opium-
addicted Chinese) continued at an escalating rate through to the
end of the century. Often these Chinese "indentureds" would put
their entire earnings toward bringing their families over to the

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DOPE, INC.

U.S. This traffic in Chinese immigrants represented one of the
earliest channels of opium into the country, and laid the
foundations for the later mass-scale drug trade out of the
Chinatowns developed in San Francisco, Vancouver, and other
West Coast cities during this period.

The amount of opium coming into the United States during the
last quarter of the 19th century is measured by the fact that in
1875, official government statistics estimated that 120,000
Americans — over and above the Chinese immigrant population
— were addicted to opium! (38)

Adding to the opium addiction was the fact that British
pharmaceutical houses had begun commercial production of
morphine in the years leading up to the Civil War and made large
quantities available to both armies. The British firms
misrepresented the morphine as a "nonaddictive" pain killer and
even had the audacity to push it as a cure for opium addiction.

The British Brahmins in the U.S.

The nature of the London-centered cycle of international trade
from cotton to opium further cultivated a group of British
financial allies in the United States. Some of these allies are
comprador trading families whose activities span the entire
period from the inception of the opium traffic through to the
Second World War.

Most important among these groups is the Astor family
dynasty, whose founder, John Jacob Astor (1763-1848) made his
fortune in Chinese opium sales. One of his biographers reports,
"We see that quicksilver and lead from Gibraltar and opium
from Smyrna, as well as some iron and steel from the North of
Europe, began in 1816 to take a conspicuous place in the list of
Astor's imports into China... Since according to Dr. Kenneth
Scott Latourette, quicksilver and opium did not become regular
articles of import into China by Americans till about 1816, Astor
must have been one of the pioneers of their introduction." (39)

Leveraged into investments in Manhattan real estate, John
Jacob Astor's opium earnings formed the basis of one of

HISTORY

39

America's largest family fortunes. Participation in the China
opium trade, a de facto monopoly of the East India Company at
the time Astor took part in the Uaffic, was a privilege extended
only to Americans the East India Company thought deserving.
Other American firms active in the Canton trade did not touch
opium. (40) Possibly, Astor's trading privileges were a British
pecuniary reward for services as a British intelligence operative
in the United States. Astor provided funds for the escape of his
attorney Aaron Burr after Burr murdered Alexander Hamilton;
at the time. Burr was a British intelligence agent. Burr's control,
and the man to whom he fled after the murder of Hamilton, was
East India Company employee Jeremy Bentham. (41)

Apart from the Astor group in New York City, the East India
Company developed similar networks in Philadelphia and

Boston, among other American cities. The leading British
merchant bank Baring Brothers, which remodeled the old East
India Company as an instrument for the opium Uaffic after

William Pitt's installation as British Prime Minister in 1783,
acquired a group of business partners (and brothers-in-law) in

Quaker Philadelphia. The family the Barings married into was
William Bingham's, reportedly the richest in the United States at
the turn of the nineteenth century. Barings were prominent
throughout the first years of the China traffic, founded the
Hongkong and Shanghai Bank in 1864, and retained their family

seat on its directing "London Committee" as of the HongShang's
1977 annual report.

One historian describes how closely the Bingham group aped

the British oligarchy:

Bingham was a most enthusiastic admirer of the British
financial system which he desired to see copied in
America. . . . Immense wealth enabled the Binghams to

import fashions, and copy the Duke of Manchester's
residence in Philadelphia. . . they gave the first

masquerade ball in the city, encouraging what soon

became a mania among the American rich — a passion for
dressing up as aristocrats.

The Binghams finally achieved their ambitions by

40

DOPE, INC.

uniting two daughters to foreign aristocrats: one to Count
de Tilly, and the other to a member of the London banking
house of the Barings, who later became Lord Ash¬
burton. (42)

Another Philadelphia family that united itself with Baring
Brothers was that of millionaire Stephen Girard, (43) whose
interests survived under the family name, in Philadelphia's
multibillion dollar Girard Bank and Trust.

Several of the old "Boston Brahmin" families, however, made
it into the mainstream of the 19th century opium traffic, along¬
side the well-remembered British names of Jardine, Matheson,
Sassoon, Japhet, and Dent. The Perkins and Forbes families
achieved notoriety in the traffic after the East India Company's
monopoly expired in 1832, and after the Astors had ceased to be
an important factor. William Hathaway Forbes became so
prominent an associate of the British trading companies that he
joined the board of directors of the Hongkong and Shanghai Bank
in 1866, two years after its founding.

Hathaways, Perkins, and Forbes operated through a joint
outlet, Russell and Company, formed around the Perkins family
shipping empire, a "business reaching from Rio to Canton." (44)
The fortunes of these families, as with the Philadelphia group,
began with the slave trade — handed to them when the British
dropped the slave trade as unprofitable in 1833. The China
clippers of Russell and Company made not only Perkins's
fortune, but most of the city of Boston's. A biographer reports,
"By merging and creating. Russell and Company, he was
responsible to a large degree in the establishing of all of Boston's
merchant families — Cabots, Lodges, Forbes, Cunninghams,
Appletons, Bacons, Russells, Coolidges, Parkmans, Shaws,
Codmans, Boystons and Runnewells." (45)

Baring Brothers, the premier merchant bank of the opium
traffic from 1783 to the present day, also maintained close
contact with the Boston families. John Murray Forbes (1813-98)
was U.S. agent for Barings, a post occupied earlier by Phila¬
delphia's Stephen Girard; he was the father of the first American
on the HongShang board.

HISTORY

41

The group's leading banker became, at the close of the
nineteenth century, the House of Morgan — which also took its
cut in the Eastern opium traffic. Thomas Nelson Perkins, a
descendant of the opium-and-slaves shipping magnate who
founded Russell and Company, became the Morgan Bank's chief
Boston agent, through Perkins's First National Bank of Boston.
Morgan and Perkins, among other things, provided the major
endowments for Harvard University. (46) Morgan's Far Eastern
operations were the officially conducted British opium traffic.
Exemplary is the case of Morgan partner Willard Straight, who
spent the years 1901-12 in China as assistant to the notorious Sir
Robert Hart, chief of the Imperial Chinese Customs Service, and
hence the leading British official in charge of conducting opium
traffic. Afterwards he became head of Morgan bank's Far
Eastern operations. (47)

The above facts are necessary to round out the historical back¬
ground to the opium traffic today. What makes them especially
interesting is the intricate trail that leads investigators of
present-day drug financing back to the same American families
and American banks. In Part III, we will blow the cover of Phila¬
delphia's old "Main Line" Quaker families, whose present gener¬
ation controls not only the leading supply of illicit amphetamines
in the United States, but funds a whole array of street-level drug¬
trafficking operations as well.

Morgan's case deserves special scrutiny from American police
and regulatory agencies, for the intimate associations of Morgan
Guaranty Trust with the identified leadership of the British dope
banks (see Part II, Section 7). Jardine Matheson's current
chairman David Newbigging, the most powerful man today in
Hong Kong, is a member of Morgan's international advisory
board. The chairman of Morgan et Cie., the bank's international
division, sits on the Council of the Royal Institute of International
Affairs. The chairman of Morgan Grenfell, in which Morgan
Guaranty Trust has a 40 percent stake,- Lord Catto of Cairncatto,
sits on the "London Committee" of the Hongkong and Shanghai
Bank.

But perhaps the most devastating example of continuity among
the corrupted American families involves the descendants of old

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DOPE, INC.

John Jacob Astor. American citizen Waldorf Astor, his direct

descendant, was chairman of the Council of the Royal Institute of
International Affairs during the Second World War, while
Harvard-trained American citizens of the Institute for Pacific
Relations smoothed the transition to People's Republic of China

opium production (see Part II, Section 7).

The old Boston families who made their fortunes on the

narcotics traffic were the ones whom old Joseph Kennedy strove
to imitate when he obtained his British liquor delivery contacts
during Prohibition, and the same ones who staffed his son's

Administration.

Britain's

"Noble Experiment"

In the years 1919 and 1920, two events of critical strategic
importance for Britain's opium war against the United States
occurred. First, the Royal Institute of International Affairs was
founded.

The purpose of this institution had been set forth over 40 years
before in the last will and testament of empire-builder Cecil
Rhodes. Rhodes had called for the formation of a "secret
society" that would oversee the reestablishment of a British
empire that would incorporate most of the developing world and
recapture the United States (see Part II, Section 7). Toward
this objective, Rhodes's circle, including Rudyard Kipling, Lord
Milner, and a group of Oxford College graduates known as
"Milner's Kindergarten," constituted the Round Table at the
turn of the 20th century. In 1919, the same grouping founded the
Royal Institute of International Affairs as the central planning
and recruitment agency for Britain's "one world empire."

43

44

DOPE, INC.

On January 6 of the next year, Britain declared its opium war
against the United States. Americans knew it as Prohibition.

Prohibition brought the narcotics traffic, the narcotics
traffickers, and large-scale organized crime into the United
States. Illegal alcohol and illegal narcotics made up two different
product lines of the same multinational firm. The British,
through their distilleries in Scotland and Canada, and the British,
from their opium refineries in Shanghai and Hong Kong, were the
suppliers. The British, through their banks in Canada and the
Caribbean, were the financiers. Through their political conduits
in the United States, the British created the set of political
conditions under which the United States might be won back by
means other than the failed Balkanization plan of the Civil War
period.

Two tracks led to the drug epidemic in the United States, one in
the Far East, and the other in the United States and Canada.
Against the outcry of the League of Nations and virtually all the
civilized world, the British stubbornly fought to maintain opium
production in the Far East, expanding the illegal supply of
heroin, just as the drug went out of legal circulation in America in
1924. In North America, Canada — which had had its own period
of Prohibition — went "wet" one month before the United States
went dry.

In interviews with the authors. Drug Enforcement
Administration officials have emphasized the similarity of the
alcohol and narcotics modus operandi. When the agents of Arnold
Rothstein and Meyer Lansky made their first trips to the Far
East in the 1920s, they purchased heroin from the British with full
legality. What the American gangsters did with the drug was
their own business; the British opium merchants were merely
engaging in "free enterprise." When Britain's leading distilling
companies sold bulk quantities of liquor to Arnold Rothstein and
Joseph Kennedy — for delivery either to the Bahamas or to the
three-mile territorial limit of the United States coastal waters —
they had no responsibility for what happened to the liquor once it
reached American shores. (The identical explanation was
offered by an official of the British Bank of the Middle East,
which now services the Far East drug traffic through a smug-

HISTORY

45

glers' market in gold bullion in Dubai, on the Persian Gulf. "We
only sell the gold, old boy," the banker said. "What those fellows
do with it once they get it is up to them.")

Which of the American syndicates obtained this month's
franchise for drug or liquor distribution was immaterial to the
British traffickers. The greater the extent of intergang blood¬
shed, the less obvious their role would be. In fact, the British

distillers could provoke such events at will by withholding needed
inventory of bootleg alcohol.

The "Noble Experiment" was aimed at degrading the
American people through popular "violation of the law" and
association with the crime syndicate controlled by the Our
Crowd banks of Wall Street — the Zionist Lobby of its day (see
Part III). New York's Our Crowd is an extension of the London
Rothschild banking network and British Secret Intelligence into

the United States. For example. Sir William Wiseman was the
official head of British Secret Intelligence in the United States
throughout the World War I period. He became a senior partner
in the investment house of Kuhn Loeb immediately on demob¬
ilization. Wiseman was a personal protege of Canadian Round

Table founder Lord Beaverbrook and one of the most prominent
public figures in the Zionist movement. (1)

With this lower Manhattan-Canada-centered grouping acting
as the political control, the Prohibition project was launched
during the early 1910s under the shadow of the United States'
entry into World War I. It should shock no one that the creation
and rapid growth of an organized crime syndicate in the United
States was the filthy business of the Our Crowd banks — employ¬
ing the cults of Lord Palmerston and Disraeli that conducted the
unsuccessful assault against the American republic during the
Civil War.

It is a fraud of the highest order that Prohibition represented a
mass social protest against the "evils" of alcohol. Like the
environmentalist movement and other present day anti-progress
cults, the Women's Christian Temperance Union (WCTU) and its
Anti-Saloon League offshoots were a small, well-financed and
highly organized circle that enjoyed the financial backing of the
Astors, the Vanderbilts, the Warburgs, and the Rockefellers. (2)

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DOPE, INC.

Then as now, the funding conduits were principally the tax-
exempt foundations — specifically the Russell Sage Foundation
and the Rockefeller Foundation. John D. Rockefeller I was hood¬
winked by Lord Beaverbrook colleague and former Canadian
Prime Minister MacKenzie King into not only bankrolling the
WCTU, but providing it with the services of the foundation's
entire staff of private investigators. (3)

Who made up the Temperance Movement? It was run by Jane
Addams, who studied the Fabian Society's London settlement
house Toynbee Hall experiment and came to the United States
to launch a parallel project which later produced the University
of Chicago. (4) The "cadre" were drawn almost exclusively from
three pools: 1) the settlement house and suffragette networks

run by Addams and the Russell Sage Foundation; 2) the pro¬
terrorist synthetic religious cults operated out of Oberlin College
in Ohio; and 3) the Ku Klux Klan in the South.

Oberlin College was founded by British "Christian mis¬
sionaries" in the decades leading up to the Civil War. Like the
ancient anti-Christian Manichean cult, Oberlin was organized
around the principle that the material world was wholly evil; all
students (i.e. initiates) were required to become vegetarians.

From Oberlin’s student body some of the most violent radical
abolitionist terrorists were recruited, trained and deployed and
safehoused during the Civil War. (5)

Like its predecessor radical abolitionist movement, the
Temperance Movement was founded at Oberlin in the post-Civil
War period as a violent cult (known at the time as "Organized
Motherlove"). At the height of the Prohibition drive during the
1910s, bands of ax-wielding lesbians — the Susan Saxes and
Bernadine Dohrns of their day — received banner headlines for
their assaults against saloons throughout the Ohio Valley. Many
of these women were drawn from the Manichean cult at Oberlin.

Once launched as a nationwide movement, WCTU founded a
national headquarters in Evanston, 111. Nearby Wilmette, 111.
(along with London and Tel Aviv) subsequently became the

North American headquarters of the British Intelligence-

organized Ba'hai terrorist cult. (6)

In the South, parallel "fundamentalist Christian" cultists had

HISTORY

47

been drawn together from the turn of the century under the
direction of the Ku Klux Klan.

These three British cults agitated nationally for Prohibition.
While the WCTU and Anti-Saloon League staged well-publicized
and frequently violent raids against saloons, the more
sophisticated Fabian Settlement House social workers of Jane
Addams used the unique conjuncture of the recently passed
Seventeenth Amendment certifying women's voting rights in
national elections and the concentration of much of the adult
male population on the war effort to vote up the Eighteenth
Amendment making Prohibition the law of the land. The Amend¬
ment was fully ratified by 1917; however, the Volstead Act that
defined the federal enforcement procedures was not scheduled
for implementation until January 6,1920.

The three-year lead time was critical for the establishment of a
tightly organized crime syndicate, which was being organized
out of Canada and Our Crowd banking circles in New York:

* In Canada, a brief Prohibition period (1915-1919) was

principally enacted by order of Her Majesty's Privy Council to
create the financial reserves and bootlegging circuit for the U.S.
Prohibition. In this period Canada's Hofjuden Bronfman family
established the local mob contacts in the U.S. and consolidated
contractual agreements with the Royal Liquor Commission in
London.

* Primarily out of Brooklyn, New York, teams of field agents of

the Russell Sage Foundation conducted a reorganization and
recruitment drive among local hoodlum networks — already
loosely organized through Tammany Hall's New York City

Democratic Party machine. "Legitimate" business fronts were
established, replacing neighborhood nickel-and-dime loan
sharking operations, and specially selected individuals — largely
drawn from the Mazzini "Mafia" transplanted to the U.S. during
the late 1800s Italian migrations — were sent out of Brooklyn into
such major Midwest cities as Chicago, Detroit, and St. Louis in
the 12 months leading up to the Volstead enforcement. One such
Brooklyn recruit was A1 Capone.

The British oligarchy did much more than supply the gutter
elements of the crime syndicates with their stock in trade. To a

48

DOPE, INC.

surprising extent, the Anglophile portion of America's upper
crust joined the fun. The case of Joseph Kennedy, who owed his
British contracts for liquor wholesaling to the Duke of Devon¬
shire, and later married his daughter into the family, is notorious
(see Part III). In some respects more revealing is the strange
case of Robert Maynard Hutchins, the President of the Univer¬
sity of Chicago from 1929 to 1950. Hutchins had American citizen¬
ship, but was so close to the British aristocracy that he became a
Knight Commander of Her Majesty's Venerable Order of St. John
of Jerusalem, swearing an oath of chivalric fealty to the head of
the order, the British monarch.

Under the guise of "social studies research," several well-
known University of Chicago postgraduate students received
their apprenticeships in the service of the Capone gang:

* In 1930, University of Chicago graduate student Saul Alinsky,
the godfather of the "New Left," entered the Capone Mob in
Chicago. Alinsky for several years was the accountant for the
gang — at the height of the Prohibition profiteering. (7) Alinsky
went on to be one of the most important British Fabian-modeled
social engineers in the United States for the next 30 years,
specializing in the creation of synthetic dionysian cults among
the nation's youth and ghetto victims.

Alinsky, in fact, used the organizational model of the Capone
Mob to build up a criminal youth gang infrastructure in Chicago
during the early 1960s that assumed street-level control over drug
trafficking and related criminal operations run 30 years earlier
through the Capone gang. When the Our Crowd sponsors of
Capone's initial deployment to Chicago determined at the close of
Prohibition that a more "civilized" cutout was desired, Alinsky
was the channel for bringing Frank Nitti into the Mob.

* In the late 1940s, University of Chicago professor Milton
Friedman was installed as President of the Gold Seal Liquor
Company — the original Capone enterprise. Friedman soon also
assumed the presidency of the Illinois Wholesale Liquor Dealers
Association — a position from which he no doubt carried out his
first experiments in "free market economics." (8)

* As late as the 1960s, retired University of Chicago President
Hutchins himself was under investigation for his involvement

HISTORY

49

with drug trafficking and other black market enterprises.
Through the late 1960s his Center for the Study of Democratic
Institutions was financed principally through Bernie Cornfeld's
Investments Overseas Service (IOS) — an international pyramid
swindle and drug money laundering enterprise (see Part III,

Section 3). Furthermore, Hutchins was simultaneously the

president of a little-known Nevada foundation called the Albert
Parvin Foundation which several congressional committees

investigating organized crime cited as a front for Las Vegas
gambling receipts. (9)

Mounting the drug invasion

The United States' fourteen-year experiment in Prohibition
accomplished precisely what its British framers had intended.

Ralph Salerno, an internationally recognized authority and
historian on organized crime, a law enforcement consultant and
former member of the New York City Police Department's
intelligence division, succinctly summarized the effect of
Britain's Prohibition gameplan in his book. The Crime
Confederation:

The most crucial event in the history of the confederation
(organized crime — ed.) was a legal assist called Pro¬
hibition. . . . Prohibition helped foster organized crime in

several ways. It was the first source of real big money.

Until that time, prostitution, gambling, extortion and other
activities had not generated much capital even on their

largest scale. But illegal liquor was a multibillion dollar

industry. It furnished the money that the organization later
used to expand into other illegal activities and to penetrate
legitimate business. Prohibition also opened the way to

corruption of politicians and policemen on a large scale. It

began the syndicate connection with politics and it

demoralized some law enforcement groups to the point
where they have never really recovered.

The manufacture and distribution of illegal liquor here and

50

DOPE, INC.

the importation of foreign-made liquor gave the men who
were organizing crime experience in the administration
and control of multibillion dollar world businesses with

thousands of employees and long payrolls. Men who had

never before managed anything bigger than a family farm

or a local gang got on-the-job training that turned them into
leaders developing executive qualities.

. . . Mass evasion of the Volstead Act also put the average
citizen in touch with criminals, resulting in tolerance and
eventually admiration and even romantic approval of
them. It permanently undermined respect for the law and
for the people enforcing it. Ever since Prohibition the man
in the street has accepted the idea that cops can be
bought. (10)

The combined revenues of the illicit whiskey and drug trade

during Prohibition had constituted a multibillion dollar black
market booty. While families like the Kennedys and Bronfmans
"made out like bandits" in the early 1930s transition to
"legitimate" liquor trade, the overall financial structure for
maintaining an organized crime infrastructure demanded diver¬

sification into other areas of black market activity only
marginally developed previously. The market for illicit drugs in
the United States — though significantly expanded as the result
of the Prohibition experience — was not to become the foundation
of a multibillion dollar traffic for several decades.

In the interim, the Our Crowd-British crime syndicate turned
to casino gambling and associated enterprises as the immediate
area for expansion. The Lansky syndicate took the opportunity of
Nevada's 1933 passage of specific regulations legalizing casino
operations to turn that no-man's-land into a desert resort to house
all the West Coast criminal operations that had previously been
run on pleasure boats 12 miles off the coast of Hollywood. Lansky
also moved into the Caribbean, preparing the way for the British
offshore complex of unregulated banking.

Through the investment of the phenomenal profits derived
from the Prohibition into gambling casinos, professional sports
stadiums and racetracks, organized crime established the

HISTORY

51

foundations during the 1930s and 1940s for the drug trafficking
that would begin in the mid-1950s — once a cultural climate had
been created that was conducive to fostering drug addiction.

Nixon's war on drugs

It is not widely known that President Nixon was a casualty in
the war against Britain's drug invasion of the United States. Had
Nixon not taken up the most basic interests of the nation in
launching a wholesale effort to shut down the drug trafficking —
from the top down — it is likely that he would not have been
unceremoniously forced out of office by Henry Kissinger, Ted
Kennedy, and their British masters.

By 1970 Nixon became profoundly aware that the proliferation
of drug abuse among the nation's youth had become a problem of
such monumental significance that all his efforts to institute a
long-range program of peace-through-development would be
meaningless unless combined with a ruthless crackdown on the
poison that threatened to wreck the nation's future leadership
and its productive sector. Documents are available in the public
domain from the Drug Enforcement Administration and other
executive agencies showing that Nixon's "War on Drugs" was
directed at the top — at the banking institutions, the transporta¬
tion grids, and only then at the distribution channels delivering
the volumes of drugs onto the streets of the country.

At the same time that Nixon generically understood the top-
down nature of the problem, he and his assistants scarcely under¬
stood that by going after the drug infrastructure they were taking
on the entire British oligarchy and the entire underpinnings of the
Eurodollar market and the People's Republic of China. Had
Nixon understood the drug problem as a London-Peking problem,
he would have perhaps been better prepared to deal with the
"inside-outside" attack against his Presidency.

In Part II of this report, we will reveal the inner workings of the
London-Peking Drug Empire the Nixon Administration ran up
against when it declared its War on Drugs.

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DOPE, INC.

Notes

1. BRITAIN'S FIRST OPIUM WARS

1. As quoted in Jack Beeching, The Chinese Opium Wars (New York:
Harvest Books, 1975), p. 258.

2. Adam Smith, Wealth of Nations, Representative Selections (New
York: Bobbs-Merrill, 1961).

3. Richard Morris, The Peacemakers: The Great Powers and American
Independence (New York: Harper & Row).

4. Beeching, Chinese Opium Wars, p. 43.

5. In addition to the Chinese Hong merchants who collaborated with the
British opium houses and the run-of-the-mill pirates and river rats that
the British recruited into their service as the "eyes and ears" in Canton
and the interior, the Hakkas, a people living in the southern province of
Kwangsi who were under the strong influence of the Heaven and Earth
Society (Triads) were particularly important to the British operations.
The Triads, devoted to the days of the Ming Dynasty — and who were
very similar to the Freemason organizations in Europe and North
America — wanted to overthrow the Manchu Dynasty. The Hakkas were
used by both the British and their Triad allies as a grassroots bludgeon
against the Emperor. The key figure in the joint Anglo-Triad venture was
a religious fanatic named Hung Hsui-Ch’uan.

Hung, having suffered public "loss of face" on four occasions — he
failed the examinations that would allow him to join the mandarin class
and become a government official — suffered a nervous collapse. He was
in a trance for 40 days in which he was supposedly born again and then,
using a translation of the King James Bible, he created a new religion
based on the notion of "The Chosen People." The Hakkas were to be the

Chosen People, and the Triad identification of the Manchus as the enemy

was fully incorporated into Hung's quasi-Protestant religion.

Hung served as the "prophet," and a Hakkas Triad member, Yang
Hsin-Ch'ing, served as the recruiter and military commander of the

movement. Yang was in the employ of the British as an opium runner on
the Pearl River.

In 1851, Hung and Yang launched a full-scale assault against the

Manchu Dynasty — called the Taiping Revolt, or "The Triad War" —
which drained China's treasury, shook the government, and demoralized
China's pathetic army. The Taiping-Triad forces also played a significant
role in the 1911 overthrow of the Manchu Dynasty that led to the republic
of China under its president Dr. Sun Yat-sen (also a member of the "Hung
Society"), although the organization was outlawed as treasonous and
terrorist in 1890.

HISTORY

53

For further reading on the Hung-Triad Societies see: Lady
Queensborough, Occult Theocrasy, Volumes I and II (France: The Inter¬
national League for Historical Research, 1931), pp. 441-42; Beeching,
Chinese Opium Wars, pp. 180-205.

6. Beeching, Chinese Opium Wars, p. 80.

7. Ibid., p. 98.

8. Ibid., p. 127.

9. Ibid., p. 95.

10. Ibid., p.272.

11. Ibid., p.272.

12. Ibid., p. 264.

13. Karl Marx and Frederick Engels, Civil War in the United States (New
York: International Publishing Co.).

14. Brian Ingles, The Forbidden Game: A Social History of Drugs (New
York: Charles Scribner's, 1975), chapter 11.

15. Ibid.

16. Ibid.

17. Ibid.

18. Ibid.

19. Ibid.

2. PALMERSTON'S FIFTH COLUMN IN THE USA

1. Samuel Morse, "The Present Attempt to Dissolve the American Union:
A British Aristocratic Plot" (New York: John F. Trow, 1862); Samuel
Morse, "A Foreign Conspiracy against the Liberties of the United States"
(New York: originally published by the New York Observer. 1835); see
also the soon-to-be-published book. The First American Intelligence
Service (New York: Campaigner Publications). Morse signed all his
published articles under the name "Brutus."

2. C. Bernant, The Cousinhood (New York: Macmillan Company, 1972).

3. Benjamin Peixotto. ed.. The Menorah, official organ of the B’nai
B'rith. New York. 1 (Sept. 1886).

4. Ibid.

5. Ibid.

6. Official document recorded by Benn Pittman, The Indianapolis
Treason Trial, 1865; Official Report — A Western Conspiracy in the Aid of
the Southern Rebellion (Indianapolis: 1865); see also An Authentic
Exposition of the Knights of the Golden Circle or a History of Secession
(pamphlet), author unknown, believed to be Union counterespionage
agent named Jim Pumfrey (Indianapolis: 1861); Mayo Fesler, "Secret
Political Societies in the North during the Civil War," Indiana Historical
Magazine 3 (Sept. 1918).

7. Burton Hendrick, Statesman of the Lost Cause, Jefferson Davis and
His Cabinet (New York: Literary Guild of America, 1939), pp. 153-181;
Max Kohler, Judah Benjamin: Statesman and Jurist (Baltimore, 1905).

54

DOPE, INC.

8. Israel Joseph Benjamin, "Three Years in America, 1859-62" (New
York: 1863), Vol. I; contains a profile of B'nai B'rith and 44 Jewish
organizations.

9. Albert Pike, Lectures of Arya and Indo-Aryan Deities and Worship,
published by the Ancient and Accepted Scottish Rite of Freemasonry of
the Southern Jurisdiction of the U.S.A. on orders of the Grand Command
of the Supreme Council 33°; see also Queensborough, Theocrasy.

10. Queensborough, Theocrasy.

11. Ibid.

12. Ibid.; see also Merle Curti, "Young America," American Historical
Review, 1929.

13. Menorah, Sept. 1886; see also Queensborough, Theocrasy.

14. Queensborough, Theocrasy.

15. John A. Bingham, Special Judge Advocate, "Trial of the Conspirators
for the Assassination of President Lincoln Delivered June 2-28, 1865,
before the Military Commission of the Court Martial of the Lincoln Con¬
spirators," War Department Records, Section Monograph 2257, Official
Transcript.

16. Clayton Gray, Conspiracy in Canada (L'Atelier Press, 1957); David
Balsiger and Charles Sellin, The Lincoln Conspiracy (Albuquerque:
Sun Publishing Co., 1977).

17. Gray, Conspiracy in Canada.

18. Ibid.; see also Susan Davis, Authentic History of the Ku Klux Klan,
1865-1877.1924.

19. Gray, Conspiracy in Canada.

20. A. R. Turner-Tyrnauer, Lincoln and the Emperors (New York:
Harcourt, Brace and World, Inc., 1962).

21. Queensborough, Theocrasy.

22. Menorah, Sept., 1886.

23. The Green Shirts emerged from the networks that the Order of Zion
had put in place in Romania and consolidated with the coup to install King
Charles in 1887; see also Paul Goldstein, "The Rothschild Roots of the
KKK," Executive Intelligence Review 39: 50.

24. The political error the Okhrana made in its use of the Protocols was to
generalize the notion of a Zionist conspiracy to include all of Jewry. The
Protocols were then used by British intelligence operatives within the
Okhrana to unleash pogroms against Russian Jews in conjunction with
and following the "1905 Revolution" destabilization of the Witte govern¬
ment.

25. The Protocols have been published most recently in Herman
Bernstein, The Truth About the Protocols of Zion (New York: Ktav
Publishers, 1971).

26. Sources in Mexico made this oath available to the authors and have
confirmed that it is authentic. It should be noted, however, that the
Knights of Columbus in the United States is a very different organization
from this Mexican branch, and the two should not be confused.

27. Canadian Jewish Congress report, 1967-68 (see Part III, Section 1).

HISTORY

55

28. Edyth Hinkley, Mazzini: The Story of a Great Italian (Port Washing¬
ton, N.Y.: Kennikat Press, 1924).

29. Charles William Heckethorn. The Secret Societies of All Ages and
Countries, Vol. I and II, 1875 (New York: University Books, Inc., 1965);
see also David Leon Chandler, Brothers in Blood (New York: E.P. Dutton
Co., Inc., 1975), p. 31.

30. Chandler, Brothers in Blood, p. 103.

31. Ibid., p. 75.

32. Ibid.

33. Ibid., p. 79.

34. Ibid., pp. 95, 97.

35. Ibid., p. 97.

36. Ibid., p. 98.

37. Beeching, Chinese Opium Wars, p. 178.

38. Ibid.

39. Kenneth Wiggins Porter, John Jacob Astor, Business Man (New
York: Russell and Russell, 1966).

40. Beeching, Chinese Opium Wars.

41. Porter, John Jacob Astor, p. 604.

42. Miriam Beard, History of Business, Vol. II (Ann Arbor: University of
Michigan Press, 1963), p. 162ff.; see also Joseph Wechsberg, The
Merchant Bankers (Boston: Little, Brown, and Company, 1966), 104 ff.

43. Wechsberg, Merchant Bankers, p. 123.

44. Beeching, Chinese Opium Wars.

45. Brett Howard, Boston: A Social History (New York: Hawthorn
Books, Inc., 1976).

46. Ibid.

47. Ingles, The Forbidden Game.

3. BRITAIN'S NOBLE EXPERIMENT

1 Who's Who in America and Who's Who in World Jewry.

2. John Kobler, Ardent Spirits (New York: G. P. Putnam's Sons, 1973).

3. Ibid.

4. Jeffrey Steinberg, "Robert M. Hutchins: Shaper of an American

oligarchy," The Campaigner, Vol. II, 3-4:73-77.

5. Queensborough, Occult Theocrasy.

6. Bruce Wood, "Cult and Terrorist Activities in the Detroit, Michigan
Area Since the 1960s," an unpublished manuscript, September, 1976.

7. Saul Alinsky, Reveille for Radicals (New York: Random House. 1969).

8. John Kobler, Capone: The Legacy (New York: G. P. Putnam's Sons,
1972).

9. Hank Messick, Lansky (New York: Berkley Medallion Books, 1971). p.

152

10. Ralph Salerno and John S. Tompkins, The Crime Confederation (New
York: Doubleday and Company, Inc., 1969). pp. 275,278-79.

PART II

How the

Drug Empire Works

Introduction

The basis of this investigation

In the following pages we will take the reader from the opium¬
growing mountains of the Far East's Golden Triangle, to the of¬
fices of opium wholesalers in the expatriate Chinese districts of
Bangkok, Rangoon, and Singapore; we will take him through the
bonded warehouses, shipping lines and air freight companies of
old-line British trading companies who control the Chinese expa¬
triate wholesalers; we will lead him through the maze of finan¬
cial channels that fund the Far East's opium trade, to the august
portals of Hongkong and Shanghai Banking Corporation and
other top British banks who control the financing topdown; we
will take him across the Pacific to the ports of entry for heroin
into the United States, to the skyscraper offices of the Canadian
banks and corporations who finance, ship, and protect the heroin
en route to the United States; and, finally, we will guide the read¬
er down the family trees of the Canada-based Zionist financiers,
to their contact-points in the world of organized crime and heroin
distribution. When this is done, we will have reconstructed the
Annual Report of Dope, Incorporated, including balance sheet.

59

60

DOPE, INC.

board of directors, senior operating officers, table of organiza¬
tion, and subsidiaries.

At the conclusion, the reader will know and understand more
about the personnel and operations of illegal drugs — the world's
biggest business since the days of opium-pusher Adam Smith —
than the law enforcement authorities of the United States and
other countries knew until recently. In the files of these agencies,
in the minds of solitary investigators, and, to a surprising extent,
in the public record itself, the pieces of the puzzle have existed for
years. Fitting them together into a single picture is the task of
this investigation. But the puzzle is not a jigsaw game, in which
the picture is assembled by fitting the pieces together side-by-
side. As a first approximation, it would be better for the reader to
imagine a set of clear plastic overlays, each of which contains
part of the picture; laid one on top of the other, they complete the
puzzle.

The different overlays of this puzzle are these:

1) The detailed record assembled by American and other
investigators of the mechanics of the opium trade from the Gold¬
en Triangle down to opium's ports of departure to the rest of the
world;

2) Pinpointed identification of opium wholesalers, largely in
the Chinese expatriate community, including the names of lead¬
ing bankers;

3) A comprehensive profile of British finance in the Far East,
revolving around the Flong Kong financial center and its leading
bank, the Hongkong and Shanghai, including the web of British
ties to the Chinese expatriate banking community throughout the
area;

4) An exhaustive grid of the British control over means of laun¬
dering dirty money in the hundreds of billions of dollars, includ¬
ing "offshore" banking, gold, and diamonds;

5) A grid of the huge quantity of public record material show¬
ing the integration of British Far East and dirty money financial]
operations worldwide with the top level of British foreign policy¬
making, centered in the Royal Institute of International Affairs;

6) The similar public record of evidence of strategic agree¬
ment between Great Britain and the Maoist People's Republic of

HOW THE DRUG EMPIRE WORKS

61

China, going back to negotiations between British opium-runners
and Mao Tse-tung, under the auspices of the Royal Institute of
International Affairs;

7) Twenty years of official documentation — from American,
Japanese, Taiwanese, and Soviet sources — that the People's Re¬
public of China grows and exports opium not only to earn foreign
exchange, but to fund secret intelligence operations, through Chi¬
nese expatriates;

8) A comprehensive grid of the intimate links between all these
elements — British old-line opium-runners, British dirty money
operations, Chinese expatriate overseas operations, British-
Chinese policy agreement — with the "Canadian" connection to
American organized crime;

9) The international web of the British-centered "Zionist
lobby," and its special function in gold and diamond-related dirty
money operations, laundering of dirty money, financing of inter¬
national terrorism, and financial control of the Canada-U.S. drug
channels;

10) Lastly, a gridding that demonstrates that the leading con¬
trollers of the opium war against the United States are not only

connected by interlocking directorates and other business ties

but by ties of "blood" that constitute this web under one family.

The resulting picture is comprehensive: the entire mass of de¬
tailed, documented evidence fits together into a single picture,
stretching from the present day back through the British origins
of the opium trade in the time of Adam Smith.

The Hongkong and Shanghai Bank and related companies fi¬
nance the opium trade. In this, they are acting as designated

agents of the British monarchy, through the Royal Institute of In¬
ternational Affairs. Not only do they control the expatriate Chi¬

nese legmen of the opium trade, but they do so as part of an
agreement negotiated between Mao Tse-tung and the Royal Insti¬
tute of International Affairs, by the Hongkong and Shanghai's
leading representatives!

The gold and diamonds side of the dirty money laundering
operations, under the immediate control of Britain's Zionist
Hofjuden (Court Jews), is part of the same machine. Through the
highest circles of British policy, all the important branches of the

62

DOPE, INC.

drug machine — the Chinese connection, the old-line British
opium traders, the dirty "offshore" banking sector, and the Zion¬
ist Hofjuden — run Canada from the top.

From there the trail leads directly into the American crime
syndicate, through the Hofjuden Bronfman family.

The world illegal drug traffic is not only the world's biggest
swindle and subversive agency: it is controlled by a single group
of evil men whose names and organizational affiliations are all
printed below, and whose intimate ties of ownership, family, and
political collaboration go back 200 years. We know their names
and addresses, and know how to mop them up.

1

Banking and the World's
Biggest Business

Assembled as one picture, the hard evidence available from the
Drug Enforcement Administration and other law enforcement
bodies leaves only one possible conclusion: The drug "industry"
is run as a single integrated world operation, from the opium
poppy to the nickel bag of heroin sold on an inner-city street cor¬
ner. Not only is illegal drug traffic under the control of a single
world network, but opiates traffic in particular is without doubt
the best-controlled production and distribution system of any
commodity in international trade, illegal or legal. De Beers' Cen¬
tral Selling Organization's 85 percent control of world diamond
wholesaling — an example not irrelevant to the drug trade —
pales by comparison to the orderly marketing arrangements for
heroin demonstrated by the hardest figures available.

Investigators are daunted by the fact that the solution to the
problem is so damned obvious. Imagine Edgar Allan Poe's fic¬
tional purloined letter, photographically enlarged to 8 by 20 feet,
and used as wallpaper; then, imagine the French police attempt¬
ing to find it with magnifying glasses.

When we speak of the drug-related illegal economy — for drugs

63

64

DOPE, INC.

are the pivot on which most other illegal activity turns — we are
talking of a $200 billion per year business, the biggest business in
the world. That is net, not gross, annual sales of drugs, plus
related illicit payments.

How can such activity avoid sticking out wildly, especially in
areas of concentration such as the Far East? Because the British
monarchy organized most of the Far East to conform to the drug
traffic! How can $200 billion in illegal payments get through the
international banking system past the eyes of law enforcement
authorities? The answer is: the Anglo-Dutch "offshore" banking
system. This and related precious metals and gems trade were
designed around illegal money in the first place!

Mere consideration of the obvious — or what will quickly be¬
come obvious when the evidence of the public record is assem¬
bled below — gives the financial specialist the equivalent of an
inner-ear disorder. The financial world, remember, is one in
which the stock market will do flips over a measly few hundred
million dollars' difference in the weekly reported figures for the
American money supply. Although most of the necessary evi¬
dence has long been available, both investigators and the public
prefer to see world drug traffic and related illegal activity as a
montage of movie villains: Far Eastern warlords, free-lance
smugglers, jowly gangsters, and corrupt politicians. Such indi¬
viduals figure into the world drug traffic, but as the arms and
legs of a top-down operation, under the immediate control of the
British and allied monarchies.

The most striking single fact for this conclusion is that the price
series for heroin at retail level in major American cities show vir¬
tually total uniformity. Law enforcement records show that,
within the acceptable range of 3 to 6 percent purity at the street
level, the price of heroin has been constant between widely dis¬
parate distribution points during the past ten years. Arrests of
local distribution chains, internecine warfare among drug-
traffickers, interdiction of smuggling routes, the virtual elimina¬
tion of the Turkish opium supply after 1972, the scouring of Asian
and European transit points, and local changes in political and
growing conditions in the Golden Triangle growing area, all have
failed to have any effect on the single world heroin price! The few

HOW THE DRUG EMPIRE WORKS

65

exceptions prove the rule, and consist mainly of sharp tempo¬
rary drops in some local retail prices, attributed to occasional
free-lance supply through returning Vietnam War veterans and

the like. (1)

Where does it go?

Closely related to the striking uniformity of inner-city heroin
prices at retail level in the United States is the gigantic discrep¬
ancy between known levels of opium production for illegal pur¬
poses and consumption by the world's addict population. Fairly
reliable statistical data are available for both. Within great mar¬

gins of fluctuation depending on weather, enforcement, and other
conditions, available supply exceeds demand by roughly a factor
often.

Approximately 700 tons annually are produced and transported
out of the world's largest opium-growing area, the Golden
Triangle. (2) Seven hundred tons of raw opium, in the form of
balls of opium gum, are the equivalent of about 70 tons of refined
heroin. In practice less than half this amount is refined into

heroin; the remainder is sold in the form of either opium or mor¬
phine base, largely for smoking purposes, and largely to an ad¬
dict population in the orient itself. However, by all estimates of
the American addict population, approximately three tons per
year of refined heroin are more than sufficient to meet annual
consumption "requirements." About that much again is required
to maintain all other heroin addicts in the noncommunist ad¬
vanced sector.

DEA and other official sources affirm the cited production

figures through direct monitoring of opium shipments and other
sophisticated intelligence methods. Consumption and sales are
obviously limited by the possible size and financial resources of
the addict population in the advanced sector. To use a rough
example: If the full 30,000 kilograms of annual Golden Triangle
heroin production obtained the full street price for heroin, the
total retail value would be about $150 billion. But most estimates
of annual illegal purchases of retail heroin are under $15 billion.

66

DOPE, INC.

In short, most of it is never sold, because production capacity is
enormous relative to the market's absorption capacity.

What happens to the rest of the heroin? Only a small portion of
the total comes into the hands of law enforcement agencies,
whose capture of a few pounds of heroin is a matter for cele¬
bration. We still must account for tens of tons. The law enforce¬
ment records indicate that the drug is warehoused in huge stock¬
piles against contingencies and to prevent oversupply on the mar¬
ket. For example, during the height of the crackdown on
Southeast Asia heroin traffic in 1972 (immediately after U.S.
troops withdrew), a single refinery captured by Thai police had
on hand a stockpile of 3,000 kilograms, roughly one-tenth of
Southeast Asian production. At the time, 21 refineries were
known to be operational in the area. (3).

MARKET ANALYSIS

The law enforcement record shows that Dope, Incorporated
does its best to avoid mishaps through careful research — on the
streets of American cities — which is transmitted back to the
poppy fields. Meo tribesmen in the Burmese or Yunnan Province
mountains foothills do not plant what they feel like, but what they
are told to plant. This facet of the production cycle is well known
to law enforcement investigators. If for some reason the market
research is off, chaos will ensue, as it did in 1972, when the Golden
Triangle yielded a bumper harvest, after wholesalers told poppy¬
growing peasants to increase their acreage by 50 to 100 percent.
The wholesalers counted on the continuing exponential expansion
of heroin consumption among American soldiers in Vietnam.
Nixon pulled the rug out from under them by pulling the troops
out, leaving the world heroin market in an unprecedented state of
oversupply.

Reckless price-cutting and competition for sales outlets in this
case might have provoked serious consequences for Dope,
Incorporated were it not for "government regulatory interven¬
tion." The Thai government stepped in and sold 22 tons of opium
to the United States. The opium was burned in a public ceremony
attended by giggling Thai officials, thus restoring "equilibrium"
to the market. (In any case, the Thais were only repeating the

HOW THE DRUG EMPIRE WORKS

67

action of the Imperial Chinese in 1839, who purchased and burned
more than 3,000 tons of opium to the great relief of oversupplied
British traders, who sent special fleets to India to bring addition¬
al opium back to get the Imperial Government's attractive
price.)

Once world illegal opiates traffic comes under scrutiny as an
integrated, centralized "monopoly," the discrepancy between
the huge oversupply and relatively restricted demand presents
no further difficulties. We are looking at an "industry" based on
the same principles as the world diamond cartel controlled by De
Beers, or the so-called "club" among leading pharmaceuticals
manufacturers. Diamond production capacity is so large relative
to the absorption capacity of the world market that De Beers'
Central Selling Organization, running 85 percent of world

diamond wholesale trade, limits availability in order to obtain es¬

sentially the price it wants. Pharmaceuticals are, ironically, an
even better example. Since the knowledge to manufacture most
of the commonly used prescription drugs is widespread among
the pharmaceuticals companies, and since the costs of produc¬
tion are insignificant compared to the retail prices of most drugs,
elaborate legal arrangements are necessary to prevent a price
collapse. Notoriously, the profits of the pharmaceuticals industry
owe not to chemists but to patent lawyers.

How big an industry?

Heroin trade is the ideal commodity cartel; its price is more re¬
liably controlled than that of crude oil, and its world volume of
sales, at roughly $25 billion for heroin alone and considerably
more for smoking-opium and other derivatives, is substantially
higher than that of most of the commodities UNCTAD is present¬
ly considering for cartelization. A couple of comparisons are in

order. At the recent world gold price of $225 per troy ounce, an¬

nual world gold mining production (outside the Soviet Union)
yields less than $7 billion. During 1977, after an unprecedented
price run-up, world diamond output was under $5 billion.

Allowing for the relative ease with which a large dollar value of

68

DOPE, INC.

heroin may be transported — the drug is worth at street level 366
times its weight in gold (4) — the worth of the drug trade is still
boggling. It is even more boggling when the retail value in the

United States and other OECD countries of nonopiate illegal

drugs comes into the picture. For example, the Colombia mari¬
juana crop officially estimated for this year alone carries a retail
value of $40 billion. (5) Since marijuana smoking is so wide¬

spread in the OECD countries, there probably exists a much larg¬
er market in dollar terms than the relatively restricted market
among heroin addicts.

Beyond such examples, no accurate data exist. The best that

can be stated is that the total world cash flow of illegal drug traf¬
fic certainly exceeds $100 billion, and almost certainly does not

exceed $200 billion.

The $100 to $200 billion figure includes heroin, opium, mor¬
phine, marijuana, cocaine, so-called hallucinogens, and abuse of

otherwise-legal prescription drugs. It does not include the pro¬

ceeds of other drug-related illegal activities, including gambling,
theft, prostitution, smuggling, arms traffic, and so forth. It is al¬

most meaningless to assign a total figure to the size of the world's
illegal economy. It can only be stated confidently that the illegal
economy, whose cornerstone is illegal drug traffic, exceeds the
gross national product of most of the OECD countries! That is an
extremely conservative projection of the hard data available.

To put the matter another way: all international traffic in con¬
trolled substances, including drugs, and also including means of
barter for drugs — gold, diamonds, armaments, and so forth —
the $200 billion international narcotics trade is bigger than the
world oil trade. "DOPEC" is bigger than OPEC. World trade
volume is a mere trillion dollars.

Where does the money go?

The question that emerges now is, "How is it possible that $200
billion and up in dirty money, crisscrossing international bor¬
ders, can remain outside the control of the law?" Again, only one
possible answer can be admitted: a huge chunk of international

HOW THE DRUG EMPIRE WORKS

69

banking and related financial operations have been created sole¬
ly to manage dirty money. More than that, this chunk of interna¬
tional banking enjoys the sovereign protection of more than a few
governments.

These conclusions are obvious. If the entire resources of the lar¬
gest private bank in the world, roughly $70 billion, had no other
use but the financing of illegal world drug traffic and related il¬
legal activity, those resources would be insufficient. If the mem¬
bers of the New York Clearinghouse, the richest group of com¬
mercial banks in the world, applied their entire $150 billion lend¬
ing volume to the illegal economy, the volume might just be suffi¬
cient.

In the following sections of this report, the Anglo-Dutch bank¬
ing operations that control illegal drug and related trade are
documented in detail. Below, we will demonstrate through
several chains of evidence that this is the only possible banking
network that could handle the requisite volume of illegal traffic.
The Anglo-Dutch oligarchy's banking operations have the fol¬
lowing qualifications :

1) They have run the drug trade for a century and a half.

2) They dominate those banking centers closed off to law en¬
forcement agencies.

3) Almost all such "offshore,"unregulated banking centers are
under the direct political control of the British and Dutch monar¬
chies and their allies.

4) They dominate all banking at the heart of the narcotics traf¬
fic; the Hongkong and Shanghai Bank, created in 1864 to finance
the drug trade, is exemplary.

5) They control world trade in gold and diamonds, a necessary
aspect of "hard commodity" exchange for drugs.

6) They subsume — as documented below — the full array of
connections to organized crime, the prodrug legislative lobby in
the USA, and all other required elements of distribution, protec¬
tion, and legal support.

THE OFFSHORE COVERUP

Financial specialists, who have lived too long with the smell of
the West Indies backwaters to mind it any longer, will choke on

70

DOPE, INC.

the above assertion. The general reader, by contrast, only needs
to know a few facts in order to realize that something is wrong.
All the offshore international banking operations — including the
clean side — are such a speculative whirlpool that virtually the
entire deposit base changes hands every week. Hundreds of bil¬
lions of dollars, including at least a hundred billion in the offshore
centers and further hundreds of billions elsewhere, circle the
world through teletyped bank transfers.

No banking reserves are kept on any of this, as insurance
against sudden withdrawals; in the United States, by contrast,
commercial banks must hold 15 percent of their checking account
balances and 4 percent of their savings balances on reserve. The
"offshore" banks just assume that if they are short of cash, they
can borrow what they need on the enormous "interbank" mar¬
ket. This mind-boggling financial procedure involves banks lend¬
ing funds to each other in order to obtain fractional advantages in
interest rates. Perhaps 40 percent of the total market is interbank
money. Deposit maturities are so short, and money transfers are
so rapid, that $50 billion changes hands every business day
through the New York banks' Clearinghouse system alone.

The "offshore" banking markets are precisely what the name
implies: either Britain's old island colonies refurbished for inter¬
national banking, or inland feudal relics like Andorra and
Liechtenstein. Federal bank regulators will only stare at their
shoes when asked what goes on in these places.

In the Cayman Islands, one of the largest offshore centers, the
only government is the official "Tax Haven Commission." Law
enforcement officers have absolutely no way of getting hold of
bank records in such places. Repeatedly, they have identified the
offshore centers as the place to look for dirty money. They have
not been able to, because virtually all the centers are under Brit¬
ish political protection (see below).

American banks do a land-office business in the offshore cen¬
ters, precisely because no reserves are needed, and every dollar
of deposits can be lent out for interest. Currently American banks
have over $35 billion in loans booked through Caribbean offshore
islands, more than through their offices in London.

Even clean banking operations have moved offshore because
present federal banking regulations virtually force them to. The

HOW THE DRUG EMPIRE WORKS

71

big movement offshore began under the Kennedy Administra¬
tion, when Anglophile Treasury officials C. Douglas Dillon and
Robert V. Roosa railroaded legislation through Congress that
taxed loans made to foreigners by American banks. The tax did
not apply to loans made offshore, so that is where the bankers
went. By the time the Dillon-Roosa legislation was lifted in 1974,
the banks were "hooked" through the difference in reserve re¬
quirements. In a recent interview in Euromoney magazine.
Citibank's chairman Walter Wriston denounced the Dillon-Roosa
taxes as a "pure gift to London." (6)

According to the estimates of the Bank of International Settle¬
ments, the total assets of so-called Group of Ten offshore banking
centers, the unregulated islands and enclaves where "bank
inspector" is a dirty word, amount to $94,349 billion, or close to
$100 billion, as of February 1977. The figures break down as fol¬
lows:

Deposits of Group of 10 Banks in Offshore Centers

(in millions)

Andorra

$ 3

Liechtenstein

466

Monaco

48

Bahamas

35,700

Barbados

70

Bermuda

900

Caymans

12,200

Netherlands Antilles

1,600

Panama

7,200

Trinidad and Tobago

154

Kuwait, Qatar, UAE

3,300

Bahrein, Iran, Iraq,

Libya, Oman

9,300

New Hebrides

139

Singapore

10,000

Hong Kong

8,300

Lebanon

392

Liberia

4,577

Total $94,349

Source: Bank for International Settlements

72

DOPE, INC.

The above figures do not show the actual size of the offshore
banking centers, because they include only the assets of branches
domiciled in the largest ten industrial countries. They do not in¬
clude such entities as the three large banks in Thailand's capital,
Bangkok, which figure prominently in financing Golden Triangle
opium production. Nor do they include thousands of smaller, "off¬
shore" finance companies based only in the offshore centers
themselves. Expatriate Chinese banks in the Far East, which
have long been known to be a key point of contact with illegal
drugs and other contraband traffic in the Far East, also do not
show up on these tables; there is no available data on these insti¬
tutions at all. Furthermore, the above table does include a great
deal of legitimate banking business which American and other in¬
dustrial-country banks bring to the "offshore" market for tax
and other reasons. However, the round figure of $100 billion is a
useful starting point.

Another set of figures is provided in the Bank of England's
quarterly report, although it contains the same unwanted addi¬
tions and deletions, and is thus relevant; it shows the large vol-

Deposits In or Loans From Britain By
Overseas Banks (in millions)

Deposits Loans

Bahamas

$3,000

$6,200

Bermuda

262

17

Caymans

1,380

1,408

Hong Kong

1,333

1,910

Lebanon

867

16

Liberia

—

1

Netherlands

Territories

151

83

New Hebrides

13

7

Panama

118

583

Singapore

833

3,173

Barbados

—

—

Trinidad and Tobago

179

23

Total

$8,134

$13,399

Source: Bank of England as published by Bank for International
Settlements.

HOW THE DRUG EMPIRE WORKS

73

ume of interchange between London, which in major respects

functions as the world's biggest "offshore" center, with the pre¬
viously mentioned outposts for illegal money. Unfortunately the
available figures mix in both British banks' dealings and those of
American and other banks which have offices in London.

OWNED AND OPERATED BY LONDON

More important than these numbers — which give a meager
understanding of the volume of business in the offshore centers

and mix in the legitimate business of American and other institu¬
tions — is the political control of the unregulated banking cen¬
ters, With very few exceptions, offshore banking as a whole is

under the thumb of the Anglo-Dutch oligarchy.

The British pre-eminence makes the world picture of offshore
banking and dirty money more comprehensible. If the world off¬
shore banking sector appears to run as a single operation under

British monarchy control, that is because the same group of peo¬
ple who run it also run the opium traffic whose proceeds this
banking sector was created to handle.

One index of British muscle is the following breakdown of the
offshore banking centers, comparing the number of banks in
each center directly attached to the Royal Institute of Interna¬
tional Affairs governing bodies with the number of other banks in
each center:

Offshore Center

RIIA-linked Banks

Others

Bahamas

23

21

Bermuda

5

0

Antigua

5

0

Barbados

6

3

Cayman Islands

22

12

Trinidad and Tobago

6

3

Netherlands Antilles

10

5

Panama*

9

20

Singapore**

14

20

‘The only one of the above not under British government control.

"Does not count overseas Chinese banks and other expatriates. (Source:
Polk's Banking Directory.) See also Directory to RIIA Chart (Section 7).

74

DOPE, INC.

London and Switzerland are not normally considered offshore
banking centers, although in practice both centers function that
way. Although Switzerland has signed a treaty with the United
States permitting law enforcement officers to investigate and
seize funds relating to illegal narcotics traffic (resulting in one

recent $250 million seizure), Swiss banks are still notorious depots
for dirty money. However, the Swiss side of the operation, typ¬
ified by Lombard Odier and Edmond de Rothschild's Banque

Privee in Geneva, and the Zionist-controlled Baseler Handels-
bank is more specialized. Their most important activity is con-
duiting funds for international terrorism. Most recently, Euro¬
pean authorities traced the funding of the 1978 Aldo Moro assass¬
ination through Swiss channels back to Israel.

London is the largest center for Eurodollar banking under the
encouragement of the Bank of England, which permits the for¬
eign branches of U.S. and other banks to hold external accounts

in London without reserve requirements, and with minimal in¬
spection. At last count, international banks had $90 billion in
assets in London. The Bank of England can do as much or as little
as it wants in the way of regulation, under British law.

For self-evident reasons, even the best-protected institutions of
the British oligarchy prefer to launder their dirty money through
Caribbean, Hong Kong, and similar branch operations, rather
than in London itself.

Because the British suppliers of narcotics have ironclad con¬
trol over offshore bank operations, American organized crime
marketers of those narcotics have had a field day in the Cayman
Islands and the Bahamas. American drug enforcement author¬
ities know that most of the dirty money arising from the U.S.
drug trade and related illegal activities ends up in the Bahamas.
There has been, unfortunately, little public heat against the
British officials who control the operations.

This level of control reaches the flagrant. For example, the
chief of all banking regulation and licensing in the Cayman Is¬
lands, a close third behind Hong Kong and Macao in the big
league of dirty money, is one Mr. Benbow. Mr. Benbow is a re¬
tired official of Britain's National Westminster Bank, which
shares two directors, J.A.F. Binny and R.J. Dent, with the

HOW THE DRUG EMPIRE WORKS

75

Hongkong and Shanghai Bank. Benbow got his present job at the
recommendation of the British-influenced International Mon¬
etary Fund, according to a source at the IMF's Exchange and
Stabilization division. Direct British "hands-on" management of

the Caribbean offshore operation dates back to the 1940s, when
E.D. Sassoon, Ltd. of Hong Kong — which had made its fortune
from the opium trade over the preceding century — picked up,
moved, and became E.D. Sassoon, Ltd. of the Bahamas.

Virtually the only one of the offshore centers not under official
British control is Panama; not coincidentally, Panama is the

only offshore center where American banks strongly outnumber
British banks. That is not to say that Panama is clean; on the con¬
trary, most of the funds derived from the Colombian trade in
marijuana and cocaine are laundered through Panama, through

the three large Colombian banks resident there. However,
American banks have a measure of maneuvering room that they
do not have in the Cayman Islands or the Bahamas, under the
snooping eyes of the British authorities.

West German banking sources believe that the British banks
behind Drugs, Incorporated want to move in on Panama and

close the gap. The West German sources identify a special fea¬
ture of the drug-ridden Hongkong and Shanghai Bank's proposed
takeover of a controlling share in New York's $20 billion Marine
Midland Bank: Marine Midland is the transactions agent for the
central bank of Panama. All of the national accounts clear
through Marine Midland. Should the Hongkong and Shanghai
succeed in acquiring the American bank, it would exercise a deci¬
sive margin of control over the Panama offshore market, and
bring British control over the offshore centers full circle.

Longstanding ties between Marine Midland and Panama were
reflected in the fact that a former board member of Marine
Midland Bank, Coudert Brothers lawyer Sol Linowitz, negotiated
the Carter Administration's recent treaty concerning the
Panama Canal.

FAR EAST CHOKEPOINT

The next sections will concentrate on the Far East offshore
banking connection to the drug traffic as a model for the world

76

DOPE, INC.

operation, and follow the trail back to the controlling centers in
London. British control over the world dirty money operation is
no secret, and the British-Canadian-Caribbean connection to or¬
ganized crime in the United States is so thoroughly documented
that no doubt need remain.

However, it is the Far East that acts as a chokepoint for dirty
money, in such volume that it dwarfs legitimate economic activ¬
ity in the region, and in the British Crown Colony of Hong Kong in
particular.

London has seduced and jostled American banking operations
into the Caribbean to such an extent that there is a vast amount of
legitimate money mixed in with the proceeds of the drug traffic.
However, Hong Kong was set up by the British, literally from
bare rock, as a center for the drug trade, and remains to this day
purely British, and purely a center for the drug trade. In the Far
Eastern example we can "prove" that Britain (and its Peking
allies) run every phase of international drug traffic.

The laundering cycle

The Drug Enforcement Administration and other law enforce¬
ment organizations know how the cycle of dirty money in the
United States works. The $50 billion retail proceeds of the total
drug traffic in the United States are partly recycled into the drug
operation in the United States itself, with large "offtake" by each
level of the crime machine. The net profits, in cash, are
laundered through hotels, restaurants, gambling casinos, and
sports events — the "corporate profile" of the Max Jacobs family
and other footsoldiers of the British drug machine.

After the cash is laundered through these nominally legitimate
channels, it is transferred to offshore banking operations or their
equivalent. Then, according to Drug Enforcement Administration
officials, the funds take several trips around the world over the
telex machines of offshore banks, passing through at least a half-
dozen, and usually more, different bank accounts and corporate
fronts, from the Caymans to Liechtenstein, from Liechtenstein to

HOW THE DRUG EMPIRE WORKS

77

the Bahamas, from the Bahamas to a "nonresident corporation"
in Canada, from Canada to Panama, and so forth.

At various points in the process, the funds will purchase dia¬
monds, gold, paintings, or similar portable valuables. At a fur¬
ther point, the valuables will be translated back into cash, elim¬
inating even the trace of a bank transfer. For this reason, the use
of undercover agents, in place even at fairly high levels in known
branches of narcotics trafficking, has a poor record of detecting
either the source or ultimate destination of narcotics-related
funds.

Once laundered, the proceeds of the drug traffic and related il¬
legal activities divide into three channels. First, between 10 and
20 percent of the total is recycled back to the opium wholesalers
in the Far East and the marijuana wholesalers in the Caribbean
and Latin America, constituting the net profits of the wholesale
drug trade. A second part is invested in expansion of offshore
operations, particularly gambling casinos, resorts, and other
profitable operations that are also useful for further laundering
of dirty money. The remainder is reinvested in the United States
in "legitimate" racing, gambling, hotels, restaurants, and other
business appropriate for cash-laundering and further expansion
of the domestic drug traffic.

As noted, Flong Kong and related Far East operations are the
chokepoint in the entire traffic, where dirty money is a way of
life. We will focus on the Far East, the point of origin of world
heroin traffic, and work backwards through the maze of Dope,
Incorporated fronts and subsidiaries, to arrive at the British-con-
trolled syndicates in the United States.

_2

From Opium
to Dirty Money

The starting point for the drug cash flow is the cash size of the
opium and heroin traffic in the Far East itself, before the drugs
obtain the stupendous price markups available in Western
markets. The price pyramid is known to be the following:

1. Raw opium, the gum of syrup extracted from opium
poppies, is produced in the Golden Triangle, the conjunction of
the southern border of the People's Republic of China (Yunnan
province), and the northern borders of Thailand. Burma, and
Laos. The mountainous terrain, largely above 4,000 feet in
elevation, provides ideal growing conditions. Mountain peoples,
rather than ethnic Chinese (including those in Yunnan province),
grow the opium and collect the gum. The merchant purchasing
the gum pays roughly $100 a pound. (1) at collection points such
as Lashio or Misai in Burma.

2. By the time the merchant, typically a Yunnanese, has
brought the gum by mule train to the triborder area, e.g.
Tachilek or Chiengrai in Thailand, the price has doubled, to $200

78

HOW THE DRUG EMPIRE WORKS

79

a pound. (2) At this point the opium is either refined into heroin at
refineries located in the triborder area itself, or earmarked for
the large Far Eastern market for smoking opium and related
derivatives.

Existing data permit the estimate that a division of an average
700-ton crop into 300 tons for heroin refining and 400 tons for
opium shipment for Far Eastern smoking purposes is usual. (3)

The $200 pound price at the triborder area is the price paid to
the local agent by a wholesaler based either in Bangkok,

Rangoon, or Hong Kong. Any distinction among these cities is
meaningless. The business structure of the area is under the

control of two principal groups that straddle the Far East. The

first is the old British banks and trading companies, including the
HongShang, Jardine Matheson, Charterhouse Japhet, Swire's,
and the Peninsular & Orient Lines. The second, their satellites, is
the overseas Chinese networks, under the joint control of London
and Peking.

The wholesale value of the 700 tons of annual opium product in
the Golden Triangle, prepaid in the triborder area, is roughly
$280 million. The $280 million figure, compared with the Gross

National Product of Thailand, is considerable; it is like $35 billion
in terms of the American GNP.

3. But this wholesale figure is only a small portion of the

cash flow of the Far East drug traffic. The next wholesaler, the

Bangkok merchant who buys from the first wholesaler, pays

about $1 billion for the equivalent of 700 tons of opium in the form
of either raw opium or refined heroin. This is roughly four times
what the opium was worth at the first wholesale round. The
majority of production is retailed locally at large markups

(although the markups are much smaller than in the case of
heroin retailed in Western countries).

While no hard estimates are possible, the cash flow in the Far
East related to this first phase of opium production alone could
not be less than $1 billion. That by itself is 15 percent of the

estimated assets of foreign banks in Hong Kong, or 10 percent of
estimated bank assets of foreign banks in Singapore, or precisely
Thailand's 1977 balance of trade deficit!

80

DOPE, INC.

Measured against the size of economic activity in the regions,
there is no possible way to chalk these numbers up in the "Errors
and Omissions" column. The cash must go through nominally
legitimate channels, in such volume that the nominally
legitimate channels — like the HongShang — cannot possibly be
unwitting as to the origin.

Even these numbers do not sufficiently reflect the scale of the
cash flow derived from crude opium sales alone. It must be added
that most of this cash flow is seasonal; virtually all wholesaling
must be completed during the two months following the March
poppy harvest. Correspondingly, the visible flow of drug-related
funds is several times as large during those two months.

4. Finally, the wholesale and local retail cash figures
presented above exclude what is possibly the largest component
of Far Eastern narcotics money: the reflow of funds back to the
Far East from sales made in the West. The narcotics wholesaler

in Bangkok or Rangoon or Hong Kong with direct contacts with

the growers and control of refineries has paid about $2,000 a
pound for the refined heroin. Between him and the street corner,
the same pound of heroin will undergo three markups of 1,000
percent. Its ultimate retail value (for pure heroin) will be close to
$5,000,000 per kilogram, according to official DEA figures, or
$2.27 million a pound, with a total of $25 billion for Western sales.

What portion of this markup, and. in what quantity, accrues to
the Far East wholesaler? There is no possible way to estimate
this. According to the record of arrests of heroin smuggling, a

substantial portion of such smuggling is conducted directly
through expatriate Chinese channels, like the Hong Kong-to-
Vancouver route, (4) and the notorious activities of the China
Sailors' Union of Hong Kong. However, it is this markup that
pays the wholesaler's out-of-pocket costs, including the original
purchase from the highlands merchant, the refining, the huge

quantity (perhaps 300 tons annually) of acetic anhydride used in
heroin refining, security, bribes, transportation,, warehousing,
and so forth.

If the annual profit of the Golden Triangle operators is in the
range of $5 billion — or a mere one fifth of the annual retail sales

GOLDEN

TRIANGLE

WORLD TRAFFIC

2 million addicts

Clt'ao Chou Expatriates
Burmese and Thai Wholesalers
1 Bangkok Banks

• Chin Sophonpanieh—Bangkok Bank^
■ l dane Tejapaibul—

Bangkok Metropolitan Bank

S300 million

• Hongkong & Shanghai

Bank l \

• lardinc Matheson

/ ' \

• < harterhouse Japhet

• IWO Lines

l ASIA \ S5 billion

• John Swire

/ TRAFFIC \

• Standard and Chartered

/ \

/ 1 rniH >on addicts \

Bank of Nova Scotia
Bank of Montreal
Seagram

(h'fshore Banking
/ionist Libby
Organized Crime

SI 25 billion

Figure 1

82

DOPE, INC.

of heroin in the West — then the total cash flow in the Far East
related to drugs is not $1 billion, as above, but $6 billion. The
actual reflow is probably several times that sum. Some of the $5
billion may be banked elsewhere than in the Far East. The
comparisons to the size of the region's economic activity become
all the more grotesque: Thailand's 1976 total exports were only $2
billion. Even the $6 billion figure does not include the huge Far
Eastern market for opium and heroin consumption. Added in, the
retail volume brings the total close to $10 billion — twice Hong
Kong's money supply.

There is another way to arrive at the same $10 billion figure:
the official estimate for bribes paid annually to Hong Kong police
is an astonishing $1 billion, more than the annual police budget.
From a hard business standpoint, that $1 billion in payoffs is a
major part of the overhead cost of both wholesale and retail drug
operations in Hong Kong, the area's drug capital. Since the
known profit margin in the drug trade is 500 to 1,000 percent, it is
fair to state that the $1 billion bribe figure is no more than 10
percent of local drug revenues. If $1 billion is 10 percent of the
total, the total is $10 billion.

3

How the Drug
Trade is Financed

The chain of financial control of world opium traffic begins in
Hong Kong, with billions of dollars in Hong Kong dollar loans to
expatriate Chinese operators in the drug-growing regions. These
expatriates include two of Bangkok's best-known bankers,
according to American law enforcement files.

Hong Kong also provides essential logistical support,
including:

1) Smuggler-sized gold bars, obtainable through Hongkong and
Shanghai Bank subsidiaries;

2) Diamonds, available through Hong Kong's Anglo-Israeli
controlled diamond monopoly; and

3) Warehousing facilities, dominated by a subsidiary of the
Hongkong and Shanghai Bank.

The HongShang

Hongkong and Shanghai Bank is the semi-official central bank
for the Crown Colony, regulating general market conditions.

83

84

DOPE, INC.

holding excess deposits of the myriad smaller banks, providing
rediscount facilities, and so forth. Clearly, the Hongkong and
Shanghai Bank is also the financial hydra unifying the produc¬
tion, transportation, and distribution of Asia's opium.

Not only does it dominate financial activity in Hong Kong, with
50 percent of total banking business on the island, but "bank and
government often work closely together," (1) the London Finan¬
cial Times comments. The Colonial government in Hong Kong
makes virtually no statistics on banking activity available.
Commenting on the $8.3 billion figure for Group of Ten bank
operations in Hong Kong, the Financial Times notes that, "The
official figures are also just the tip of an almost certainly greater
volume of business, which is conducted by international banks
with finance company subsidiaries in Hong Kong, or organized
from Hong Kong but routed through entirely offshore accounts in
such places as Vila (New Hebrides)." (2) To be precise, there
are 213 deposit-taking finance companies in the Colony, as well as
34 local banks and 104 bank representative offices. Over these
squats the HongShang.

The Chinese middleman

The essence of the bank's drug control is its intimate relation¬
ship to scores of expatriate Chinese banking families scattered
throughout the Far East. The British and Dutch connection to
these families dates back to the first East India Company pene¬
tration of the region. The central banking role of the HongShang
expresses an agreement that grew out of a century of official
opium trade and continues through the present.

First, consider the financial and logistical requirements of the
trade. Planning for the March opium harvest begins in Septem¬
ber. The Bangkok or Hong Kong drug wholesaler must estimate
the size of his market during the next summer, and, after market
research is completed, inform his agents in the triborder area.
(That market research must come from the United States and
other retailers.) They, in turn, will communicate to the Yunnan-
ese and other merchants who operate in the poppy-growing high-

HOW THE DRUG EMPIRE WORKS

85

lands to the north what the market will bear for the next harvest.
The merchants then inform the Meo peasants what acreage they
may plant.

At this point, the wholesaler must consider the following. First,
the physical means of payment must be obtained, including
American or Soviet armaments, gold in appropriate small-bar or
jewelry form, or whatever, and this to the tune of $140 million
worth. Golden Triangle peasants can't use American dollars.
Thousands of mules and muleteers must be made ready for the
treks into the highlands. Bribes must be paid, routes monitored,
border conditions observed, smuggling routes secured, contacts
opened in the West, and other loose ends secured. The required
seed money is in the range of the wholesaler's $2,000 a pound
price for refined heroin. (3)

What portion of the investment is made through "internal re¬
sources" of the drug wholesalers, and what portion borrowed, is
a matter of guesswork. It is known that a very large amount is
borrowed seasonally to finance drug wholesaling, largely from
expatriate Ch’ao Chou Chinese banking networks. Since the
Ch’ao Chou category includes Thailand's most prestigious bank¬
ers, who are known to engage in financing drug traffic, very con¬
siderable financial resources are at the traffic's disposal. It is a
matter of a 200 percent annual rate of interest — agreed and no
questions asked.

Known "angels" of the narcotics trade include Chen Pi Chen,
a.k.a. Chin Sophonpanich, Chairman of the Board of the Bangkok
Bank, with $5 billion in assets; and Udane Tejapaibul, former
Chairman of the Board of the Bangkok Metropolitan Bank, with
$2.4 billion in assets. Significantly, Sophonpanich, whose name is
a Thai pseudonym, is a Ch'ao Chou Chinese expatriate. (4)

Such scandalous relationships are not much of a surprise in the
region. At the time of the 1973 Thai coup, the premier's son and
chief of the narcotics bureau, Narong Kittikachorn, was found to
be a prominent investor in drug wholesaling.

The annual credit line that must be extended to drug wholesal¬
ers, assuming they finance half their operations through credit,
probably comes to about $150 million. Through pure chance, that
is the average annual growth of the Bangkok Bank's "Loans and

86

DOPE, INC.

Advances" during each of the last ten years. Of course. Chin
Sophonpanich competes with many of his Ch'ao Chou colleagues
for this lucrative business.

THE CH'AO CHOU

Wherever the Ch'ao Chou expatriate banking community has
surfaced in leading positions of influence, Peking, British, and
opium trade connections are evident. In 1958, the Thai authorities
issued a fraud warrant against Bangkok Bank's Sophonpanich.
He fled to Peking and remained there until 1965, after which he
returned, a deal with the Thai military in hand. According to area
sources, Sophonpanich still maintains close contact with the
Peking regime.

As one among several Bangkok financiers who finance the drug
wholesalers in the volume of $100-200 million per year, Sophon-
panich's contacts include several names that have frequently
appeared on the "Opium Watch List" of American law enforce¬
ment agencies: Ying Tsu-li, General Lo, and the brothers
Hutien-Hsiang and Hutien-Fa, leading refiners of heroin in the
triborder area.

In addition, area sources report that Sophonpanich has direct
links to the so-called Triads, the expatriate Chinese secret socie¬
ties that do most of the legwork in the opium traffic (see Part I).

Yet, Sophonpanich is actually nothing more than a subcontrac¬
tor of the Hongkong and Shanghai Bank, as we now demon¬
strate.

The HongShang-Chinese deal

Bangkok Bank illustrates the way the chain of financing leads
back to the HongShang. Its current asset volume is $5 billion,
much larger than the savings capacity of the area could justify.
Banking sources report that most of its credit-generating capa¬
city comes from rediscounting of the trade paper of the Singa¬
pore and Hong Kong financial markets, and mostly with the
HongShang itself. Since the HongShang controls 50 percent of
Hong Kong deposits and acts as the ultimate rediscount agency

HOW THE DRUG EMPIRE WORKS

87

for the entire colony and much of the rest of Southeast Asia, the
dependency of the Bangkok Bank and other Thai banks on the
HongShang is virtually total. Most of the Bangkok Bank's lending
volume is subcontracted business, controlled by the HongShang.

The British-Chinese expatriate link goes back as long as the
British have been in the Far East. The British organized the
systematic colonization of tens of thousands of Chinese expa¬
triates throughout the area, and started them out in the lower
levels of the business otherwise conducted by the East India com¬
panies and their successors. (5)

Even where Britain displaced early overseas Chinese financial
interests from positions they had enjoyed in the precolonial per¬
iod, they left them in local control or in a junior status in such
ureas as opium trading, and often virtually restricted them to
those areas. As W.J. Cator notes in his book The Economic
Position of the Chinese in the Netherlands Indies (6) and Purcell
notes in The Chinese in Malaya, (7) Chinese monopolies of opium
and alcohol local distribution continued in many Southeast Asian
colonies, under the aegis of the colonial authorities, into the first
decades of the 20th century.

Colonial powers divested Chinese merchants of control of many
trading monopolies granted by the precolonial local authorities,
hut left them in control of gambling and local drug and alcohol
distribution because Chinese secret societies were uniquely
equipped to handle them. The secret societies, representing
branches of societies operating in southern China, theoretically
pursued the aim of their founding — the overthrow of the Manchu
Ch'ing Dynasty in Peking. But as time wore on and the regime re¬
mained in power, the societies abroad became less interested in
the politics of their homeland and more the instruments of over¬
seas economic interests. As anthropologist William Skinner notes
in his book Chinese Society in Thailand, An Analytical His¬
tory, (8) the immigrant societies were usually headed by influ¬
ential monopoly owners — opium traders, keepers of gambling
and prostitution houses — who generally used the societies to fur¬
ther the interests of their monopolies.

In other economic sectors besides opium, it is common knowl¬
edge that overseas Chinese business interests were often

88

DOPE, INC.

employed as compradors, middlemen in the service of colonial
banking and trading operations, indispensable due to their knowl¬
edge of the local market and their language abilities. The close
economic relationships that certain segments of the Chinese busi¬
ness community enjoy with particular British banking interests
date from that experience. At every point in the postwar political
history of the region, the Chinese expatriate financiers have
acted as consistent allies of the British and Dutch. According to
standard estimates, Chinese expatriate financiers currently con¬
trol 60 to 80 percent of the economies of Indonesia, Thailand, and
Malaysia.

REGIONAL CONTROL

What the size of expatriate dependency on the Hong Kong mar¬
ket is can only be guessed. However, the existing financial data
show that the Hong Kong financial market is enormously
oriented to foreign lending, in roughly the same proportion as the
American banking system. One-third of all Hong Kong-dollar
denominated loans — excluding the so-called Asiadollar market
— are to foreign borrowers. Foreign lending stood at HK $18.47
billion in March 1978, against $39 billion in local loans. (There are
about 4.6 Hong Kong dollars to one U.S. dollar.) (9)

Since the borrowers' market for Hong Kong, rather than
American, dollars is limited to the areas of the Far East still
under British financial sway, the HK $18.47 billion figure of over¬
seas loans reflects the immense financial dependency of Burma,
Thailand, and Malaysia on Hong Kong. The business is largely
conducted through Chinese expatriate family ties. Most of Hong
Kong's 250 locally registered finance companies, in fact, are
owned by Chinese expatriates.

The scale of expatriate Chinese operations, centered in Hong
Kong and dependent on the HongKong and Shanghai Bank, is
gigantic; the overseas Chinese community controls 42 percent of
the foreign trade of the Southeast Asian countries, compared to
32 percent of Western business, 18 percent of non-Chinese local
firms, and only 8 percent of state-controlled trading com¬
panies. (10) As of the most recent figures available, Chinese
expatriate investments in the area totalled only slightly less than

1

The

Hong Kong
Markel

Hongkong

Shanghai

Bank'

Dirty Monay to

Caribbean ate.

r i^uic

The Hongkong and Shanghai Control
of Expatriate Drug Trade

DRUGS
TO WEST

DRUGS

(tpiiini
Growers

POSITS

Loans

CTiinese Kxpairiale\ Banks (Hong Kong Branches)

3

Chinese

Expatriate

Smugglers

The Hongkong and Shanghai Bank, self-described as "a monument to
British finance in Asia," is in full control of the Hong Kong money market
(1), on which such Chinese expatriate institutions (2) as the Bank of
Bangkok absolutely depend for rediscounting loans, etc. Opium smugglers
and wholesalers (3) in turn depend on the expatriate banks to finance their
barter-purchase, refining and transport of opium and heroin from the
"Golden Triangle" peasants of Southeast Asia and China's Yunnan Province
(4). From seed-money to dirty-money, the proceeds of the drug trade start
and finish with the HongShang.

90

DOPE, INC.

combined American, Western European, and Japanese invest¬
ments (although recent Japanese expansion in the area may
have shifted the proportion somewhat).

Country

Indonesia

Malaysia and Singapore

Philippines

Thailand*

Cambodia**

South Vietnam**

TOTAL

Total Expatriate
Chinese Investment
$1.2 billion
2.2 billion
1.0 billion
.3 billion
.12 billion
.25 billion
$5.07 billion

*Does not include investments of "assimilated" Ch'ao Chou bankers such
as Udane Tejapaibul and Chin Sophonpanich.

"Current status unknown.

The above figures only give a partial picture of overseas
Chinese financier dominance of Southeast Asian economies,
because the expatriate Chinese bourgeoisie is overwhelmingly in
such strategic sectors as banking, insurance, shipping, ware¬
housing, and other intermediary activities, rather than manu¬
facturing or agriculture.

According to one of Stanford University's classic China studies,
Thompson and Adloffs Minority Problems in Southeast Asia,
"Foreign-exchange and other controls (imposed by national
governments in the area — ed.) have transformed many of the
Chinese into smugglers and black marketeers, and such opera¬
tions have increased both their wealth and their unpopularity.
Attempts to control the Chinese have almost everywhere run into
the bewildering maze of overlapping Chinese organizations
which exists in every country of the area, and they have been
frustrated by Chinese evasion, ability, and indispensability." (11)

The activities of the corrupted section of the expatriate Chinese
community in Southeast Asia have provoked a long series of
clashes with national authorities — who have not generally been
successful in limiting illegal traffic. The one exception is the Brit-

HOW THE DRUG EMPIRE WORKS

91

ish possession of Hong Kong, the center of illegal operations in
the area, where the smugglers are members of Hong Kong's high
society, e.g., Macao gambling overlord Stanley Ho, who made his
career smuggling strategic materials from Hong Kong to China
via Macao during the Korean War.

4

Britain's Gold and
Dirty Diamond Operations

One feature of the financing chain of the Far Eastern drug traf¬
fic—the Asian gold market—is a tipoff of the British (and espe¬
cially Hongkong and Shanghai Bank) control over the entire pro¬
cess. It might seem strange to the general reader, but the gold
connection was one of a handful of critical clues that led investi¬
gators up the whole chain of evidence that will eventually put the
management of the HongShang and a few other long-established
institutions behind bars.

Vast quantities of gold are absorbed into the Asian drug
trade—an inestimable percentage of the 400 to 600 tons of the
metal that pass through the orient in a year, mainly through
Hong Kong, and mainly through subsidiaries of the HongShang.
The trade could not run without it and other precious, portable,
untraceable substances—like diamonds.

First of all, peasants of the Golden Triangle poppy fields do not
appreciate secret accounts in the Bahamas. Furthermore, since
the end of the Vietnam War, and the end of the widespread traffic
in contraband and American arms and American dollars, the
U.S. dollar in the form of currency is no longer an acceptable

92

HOW THE DRUG EMPIRE WORKS

93

medium of exchange. They must be paid in food—which they do
not produce themselves—goods, and gold or the equivalent.

Secondly, the People's Republic of China's share of Golden Tri¬
angle production is paid almost entirely in gold, shipped in bulk
across the Burmese border. (1) PRC gold income on opium pro¬
duction probably absorbs around one-seventh of all gold traded in
the orient (judging from data analyzed more closely in Section 6,
The Peking Connection). There could be some double counting
here, since Peking also sells gold on the Hong Kong market.

Third, and possibly most important, gold cannot be traced,
although any bank transfer ultimately can. One bar of gold looks
like any other; changing a bank balance into gold or diamonds,
and then changing it back into a bank balance, is like crossing a
river to avoid bloodhounds.

Gold is so important to the entire business that the metal's
price is pegged to the price of raw opium in the Golden Triangle
highlands. The dollar's fall in terms of the gold price from $35 an
ounce before 1971 to about $225 recently has also dramatic¬
ally escalated opium wholesale prices. The escalation of the gold
price over the past year has been so steady that all the numbers
regarding the size of the opium trade may already be gross
underestimates. One indication of the closeness of the gold-opium
relationship is the well-known story that the CIA fieldmen in
northern Laos carried both gold and opium, to use as means of
payment to the local Me'o population in case of need.

How illegal gold travels

The American public will be shocked at how openly the
HongKong and Shanghai Bank uses its monopoly in the Far East¬
ern gold trade to feed smuggling operations. Prior to the official
opening of the Hong Kong gold market in 1974, HongShang openly
financed the gold markets of Macao, the flagrantly crime-ridden
island that plays "offshore" to Hong Kong's own "offshore"
operations. Today the Hong Kong market is run topdown by
Sharps Pixley Wardley, a 51-percent owned subsidiary of the
HongShang. The Hong Kong market's current daily trading

94

DOPE, INC.

volume is in the hundreds of millions of dollars, on a par with Lon¬
don and Zurich.

Apart from Hong Kong, the other route for smuggled gold to the
Far East is through the Persian Gulf sheikdom of Dubai. The
dominant commercial and gold market force in Dubai is the Brit¬
ish Bank of the Middle East, a 100 percent subsidiary of the Hong¬
kong and Shanghai Bank.

A 1972 description from one of Britain's best-known experts,
Timothy Green of Consolidated Gold Fields, Ltd., (2) is instruc¬
tive on how the illegal flow of gold travels:

"It may indeed sound romantic, but it is a fact that both in 1970
and 1971 at least 500 tons of gold—that is to say half of all South
Africa's production, or 40 percent of total gold production in the
non-communist world—passed through unofficial channels on the
way to its ultimate destination."

"Unofficial" channels, as the author proceeds to make clear,
means illegal channels. Most of the world's existing gold is held
by central banks; prior to 1971, gold was the basis of central bank
reserves. With the advent of the new European Monetary Sys¬
tem, gold is again becoming an official monetary reserve. Gold
dealings among banks, industrial users such as jewelers, and so
forth, are also counted as "official" channels.

Apart from the drug traffic and related money-laundering
uses, gold smuggling has played a major role in aggravating the
payments deficits of Third World countries such as India, where
large numbers of private citizens hold gold. However, the Indian
government in 1977 opened up direct sales to the Indian popula¬
tion. This largely eliminated India as a haven for gold smuggling
by making gold available through official channels. Despite this,
judging from the activity of the Hong Kong market, the propor¬
tion of gold running into illegal channels has, if anything,
increased, and the drug-related proportion of the illegal gold
increased as well.

"UNOFFICIAL" MEANS ILLEGAL
Green continues: "... these unofficial channels usually start
in gold markets such as Beirut (since defunct — ed.), Dubai, Vien¬
tiane, Hong Kong and Singapore which I am discussing

HOW THE DRUG EMPIRE WORKS

95

today. Their chief role — their raison d'etre — is as distribution
centers for the smuggling; they are entrepots convenient to
nations, which for a variety of reasons, forbid the official import
of gold for commercial or hoarding uses ....

"Dubai has become the largest gold market in the world,
except for London and Zurich — no mean achievement for a
shiekhdom with a population of around 60,000. Both in 1970 and
1971 Dubai had well over 200 tons of gold — indeed in 1970 the
equivalent of a quarter of all South African production found its
way along this golden pipeline to India and Pakistan (and further
East. Since the beginning of official gold sales by the Indian gov¬
ernment, and the reopening of the Hong Kong gold market,
Dubai's importance has attenuated somewhat — ed.) .. .

"By contrast to Dubai, a gold market that developed very
quickly to meet a special short term need was Vientiane in Laos.
The market there really grew with the escalation of the war in
South Vietnam. And it grew because it was the nearest and cheap¬
est source of gold. . . . This gold which was bought as a hedge
against the constant devaluations of the Vietnamese currency
and to hide the vast black market profits made from pilfered
American arms and equipment, was paid for almost entirely in
cash. (Throughout the 1960s and 1970s, pilfered American arms
and equipment formed a major part of the barter goods ex¬
changed for opium in the Golden Triangle highlands — ed.).

"Vientiane's short success made some impact on the oldest
gold market in the Far East — Hong Kong, or more correctly
Hong Kong-Macao, for the two are held together as it were by a
golden chain. Hong Kong, as a British Crown Colony, forbids the
private holding of gold bullion; only commercial gold of less than
945 purity may be traded. To get around this regulation, gold bul¬
lion has for more than twenty-five years made a curious side¬
ways shuffle from Hong Kong to Macao and back again. The gold
bullion — in 995 good delivery bars — that comes into Hong Kong
by air from Europe and Australia ... is transferred in Macao,
where it is melted down into Chinese 1.5 and 10 tael bars. It then
returns, stealthily, to Hong Kong. This traffic has been presided
over for may years by the Wong Hong Hon Company which nego¬
tiated a series of two-year contracts with the Portuguese authori-

96

DOPE, INC.

ties in Macao for exclusive rights for the gold traffic. The traffic
was financed by the Hongkong and Shanghai Bank," (emphasis
added)

That is, in the testimony of Britain's leading gold expert, the
HongShang financed illegal gold trade in Hong Kong itself, prior
to the reopening of the Hong Kong gold market, after which the
HongShang subsidiary Sharps Pixley Wardley took over the legal
trade.

AN UNDERESTIMATION

Digging into the back archives, it is clear that Consolidated
Gold Fields' 40 percent figure for smuggled gold in 1972 repre¬
sents, if anything, a moderation of past trends. Earlier figures
are much higher. For example, British author Paul Ferris in The
City (3) claimed that in 1951 only 17 percent of all world gold pro¬
duction went through official channels; Ferris's report was
based on interviews with the London gold pool. "What happens
to the gold when it disappears into the economic undergrowth of
the East is of no concern to the London bullion dealers," Ferris
claimed, but as we will demonstrate, the London bullion dealers
know precisely what happens to the gold in the Far East. The
London bullion market is merely a subsidiary of Dope,
Incorporated.

In the July 22, 1952 issue of The Reporter, an article under the
byline of H.R. Reinhart, the then Far East correspondent of the
Neue Zuercher Zeitung, estimated Asian gold smuggling at $150
million in that year. At today's gold prices, the figure would be $1
billion for the same quantity of gold. The account bears impres¬
sive credentials, since 1) the Reporter editor at the time was Har¬
lan Cleveland, now a senior official of the Aspen Institute, and
part of the present drug machine in the U.S.; and 2) the Neue
Zuercher Zeitung, Switzerland's top daily paper, is linked
through European aristocratic ties directly to the British
monarchy. (4)

Reinhart identified a "Golden Loop, the circuitous path that
leads from North Africa to the coast of Red China and back again
as far west as India." The center of gold smuggling was the
Portuguese-controlled island of Macao, where gold smuggling is

HOW THE DRUG EMPIRE WORKS

97

legal, and "anyone who dares call a smuggler a smuggler can be
sued for libel." Then the gold is smuggled into Hong Kong, and
thence to the rest of Asia.

A mere 3 percent of the smuggled gold is seized by Hong Kong

authorities, Reinhart noted, even though customs officials

receive a 20 percent commission on all seizures; presumably,

bribes to customs officials are more substantial.

Standard Western and Soviet sources estimate the smugglers'
commission at 30-50 percent in such transactions. Soviet eco¬
nomist M.A. Andreyev reports: "According to a Chinese busi¬
nessman in Singapore, smuggling yields a profit of up to 100 per¬
cent on invested capital, which is several times higher than the
prefit received in the basic branches of the island's economy. In
Hong Kong the commission paid to smugglers amounts to from 30
to 50 percent of the cost of the smuggled commodities." (5)

However, if the bribes paid to Hong Kong customs officials are
substantial enough to overshadow the 20 percent kickback on

seized contraband gold, the bribes must also be in the order of 30
to 50 percent. The point is that the gold trade itself would not be
profitable, unless it were only a bridge transaction in a much
more profitable operation — e.g., narcotics traffic! That is the
case.

But as Reinhart reported, "British justice, as dispensed by the
magistrates' court in Hong Kong, extends even the benefit of the
doubt to a suspected smuggler caught with the goods." That
should not be a surprise at this point; as noted before, it was a
matter of public record for a quarter century that Britain's Hong¬
kong and Shanghai Bank itself financed the gold smuggling!

PEKING'S GOLD

One further crucial point — whose full importance will only
emerge in the following sections — is that the People's Republic
of China has been in on the illegal gold market since the 1949 Mao¬
ist takeover.

Gold flown into Macao, as noted above, was (before Hong Kong
opened up its gold markets in 1949) resmelted into bars of less
than 95 percent purity, whose trading the Hong Kong authorities
hypocritically endorsed. The resmelting, Reinhart reported, was

,SOLTHFK\ AFRK A

HOW THE DRUG EMPIRE WORKS

99

the business of the Kan Kuam Tsing Company in Macao. "On the
Hong Kong exchange," the Swiss journalist added, "the buyer is
not unlikely from the People's Republic of China." Since the PRC
buyer wants metal of monetary-reserve purity, above 95 percent,
he takes the gold back to the Kan Kuam Tsing Company, and

reconverts the gold back to a higher purity level. Reinhart identi¬

fied the firm Pao San and Co. as a regular vehicle for Peking gold
purchases during the early 1950s. (6)

According to Reinhart, the PRC entered the Hong Kong gold

market in 1950. Last July's announcement that 13 Communist-
owned banks in Hong Kong would be permitted to trade directly
in the Hong Kong gold market thus only extends an agreement

that has been in force since the founding of the PRC.

One big gold pool

Apart from a relatively insignificant flow of gold into Hong
Kong from mines in Australia and the Philippines — insignificant

Figure 3

Adjacent map is based on one appearing in the 1977 annual report of Con¬
solidated Gold Fields, Ltd. The world total of gold in metric tons was only
approximately 1,500. Of this, 390 metric tons was distributed from Europe
through Dubai and 287mt through China, primarily by British-controlled
agencies, most of it ending up in Hong Kong. Another 18mt is directly
exported to Hong Kong, for a total of 695mt. The vast proportion of this
flow is "unofficial," and is put to use in drug-related dirty-money
laundering. (Cf. Figure 5.)

100

DOPE, INC.

compared to the 300 tons of gold traded in Hong Kong during 1977
and the 600 tons traded during 1978 (projected) — Hong Kong
depends entirely on the London gold pool for its supplies.

Why do London's gold pool operators tolerate this situation?
Because the London gold pool is the same operation as the
Hongkong and Shanghai Bank, controlled by the same London
families whose drug-running activities go back 150 years.

There are two major South African gold producers, Anglo-
American and Consolidated Gold Fields (whose gold specialist
was quoted above); there is one major South African diamond
producer, De Beers, largely owned by Anglo-American; and five
major London gold pool firms, who meet every day in the trading
room of N.M. Rothschilds at New Court, St. Swithin Street,
London, to set the world gold "fixing." Examining these firms
individually, we discover such a manifold of connections that it is
meaningless to speak of the London and Hong Kong gold markets
as anything but branch offices of the same operation.

Hongkong and Shanghai's own gold-trading outlet is Sharps
Pixley Wardley, of which they own 51 percent. One of the five
London gold pool firms. Sharps Pixley, owns the remaining 49
percent. But Sharps Pixley itself is a fully owned subsidiary of
the London merchant bank Kleinwort Benson whose deputy
chairman is Sir Mark Turner, the chairman of Rio Tinto Zinc.
Rio Tinto Zinc itself was founded a century ago with the opium¬
trading profits of Jardine Matheson, by a member of the Mathe-
son family; the Mathesons are still large shareholders in the
HongShang. The Matheson family's heirs, the Keswick family,
still have their traditional seat on the HongShang board. Sir Mark
Turner spent World War II at Britain's Ministry of Economic
Warfare, which also employed Sir John Henry Keswick, and
another HongShang board member, John Kidston Swire.

Hong Kong's second largest bank, the Standard and Chartered
Bank, owns a majority share of another member of the London
gold pool, Mocatta Metals. Standard and Chartered's pre¬
decessor, the Standard Bank, was founded a century ago by Cecil
Rhodes, of whom we will have much to say later in Section 7.
Standard and Chartered is not only a close collaborator of the
HongShang in such matters as the transfer of Red Chinese opium

NEW YORK

CANADA

Mocatta Metals
Engelhard Minerals
NMR Metals
Republic National
Bank of

Nova Scotia (N.Y.)
Loeb. Rhoades
Harry Winston

Bank of
Nova Scotia

Noranda
Sales Corp.

Royal Bank of
Canada

Canadian
Imperial Bank

BRITISH PRODUCERS

BRITISH BANKS
Clearing Banks London Gold Pool

MIDEAST &
SUBCONTINENT

Hong Kong and
Shanghai Bank

British Bank of the Middle Fast

Barclays Int’l
(Dubai)

Barclays
Discount Bank

Bank Leumi
(Israel)

Bank Hapoalim
(India)

HONG KONG

Hong Kong and
Shanghai Bank

Sharps. Pixley,
Wardley

Jardine, Matheson

Inchcape Co.

Bankok Bank

Overseas Chinese Bank

Charter

Consolidated

Sime Darbv

Figure 4. British Gold and Diamond Syndicate

102

DOPE, INC.

money (see Section 6 below) — but is heavily interlocked since
the days of the official British opium trade.

One of Standard and Chartered's directors is the current Lord
Inchcape, of lnchcape and Co. and the Peninsular and Orient
Steam Navigation, the latter dominating ocean freight in the Far
East. Both companies are heavily represented on the HongShang
board of directors. Inchcape's father wrote the notorious 1923
Inchcape Report recommending continued British sponsorship of
the opium traffic — despite the outrage of the rest of the League
of Nations — in order to "protect the revenues" of then-British
colonies in the Far East.

This example also indicates why the London gold pool's dirty
money operations are a worldwide, not merely a Far Eastern,
problem. Mocatta Metals, a subsidiary of Standard and Chart¬
ered's Mocatta and Goldsmid. operates one of New York's big¬
gest dirty money laundering operations.

Mocatta Metal's current chairman. Dr. Henry Jarecki, has
been under investigation for years for illegal activities, although
no indictment has yet been handed down. According to European
intelligence sources, Jarecki's dirty money operation helps fund
the activities of the Mossad, Israel's foreign secret intelligence
service, in New York City, including assassination teams.

Jarecki is no small fry: he is a frequent gold columnist for
British financial publications such as Euromoney, and rated a
lengthy profile in the September 1978 issue of Fortune magazine.
Nonetheless, he is eminently suited for the role of bag-man for
Israeli intelligence hit squads. Jarecki began running

drugs as a small-time pusher on the University of Michigan
campus in 1950-51. In 1952, he spent six months in jail for sus¬
pected espionage in East Berlin. According to published sources,
approximately half of Jarecki's present staff of 28 gold traders
started out in the same Harvard Psychology Department that

featured LSD-pushers Dr. Timothy Leary and "Baba Ram Dass"
in the early 1960s. (7)

Midland Bank stands behind both Standard and Chartered and
Mocatta and Goldsmid, with a 20 percent ownership of Standard
and Chartered; it also wholly owns another London gold pool
bank, Samuel Montagu. Sir Mark Turner is a director of both

HOW THE DRUG EMPIRE WORKS

103

Midland Bank and Samuel Montagu. The Montagu family,
heavily intermarried with the Rothschilds, Montefiores, and
Samuels, is the cream of Britain's Court Jews. One of their
proteges is HongShang board member Philip de Zulueta.

N.M. Rothschild and Sons, which opened up operations in Hong
Kong in 1975 to take advantage of the newly liberalized gold trad¬
ing laws, and Johnson Matthey, the remaining members of the
London gold pool, are also interlocked several times over with
both the HongShang and the major South African gold producers.
Consolidated Gold Fields and Anglo-American who control
between them 90 percent of South Africa's gold output.

(For further details see Section 7 and 8.)

The diamond black market

Second in importance in the money-laundering process is the
world diamonds market, worth $5 billion annually at wholesale
value, whose single presiding manager is Sir Harry Oppen-
heimer of De Beers Corporation. Oppenheimer is also the chair¬
man of the larger South African gold producers, Anglo-Ameri¬
can. The Anglo-American and De Beers complex runs the Hong
Kong side of the money-laundering diamonds operation on two
levels — wholesale and retail. De Beers runs 85 percent of the
wholesale diamonds market; through his intimate Israeli
connections, Oppenheimer also runs the Hong Kong diamond
market.

WHY DIAMONDS

There are two points of special relevance for diamonds to the
international heroin traffic. The first is that, in value relative to
size and weight, diamonds are the closest approximation to
heroin as a store of value for furtive use. Secondly, the De Beers-
controlled international diamond cartel operates according to a
pyramidal structure identical to that of the world heroin trade.

The use of expatriate ethnic networks for the dirtier side of the
operations is also homologous, except that in the case of dia-

104

DOPE, INC.

monds, Jews take the place of Ch'ao Chou Chinese. Not coinci¬
dentally, there is almost as little publicly available information
on international diamonds trade as on the heroin traffic.

South Africa's largest producer, De Beers, was the 1888 crea¬

tion of Rothschild legman Cecil Rhodes; in 1929, the company
underwent reorganization by Sir Ernest Oppenheimer, of the
Anglo-American family. De Beers controls the Central Selling

Organization (CSO), which handles 85 percent of international

diamond trade.

At ten "sights" each year, 300 clients purchase stones from the
CSO. The list of these select clients is secret. Following their pur¬
chase by the secret list of clients, the diamonds are sent to cutting
centers for further preparation. The two dominant cutting cen¬
ters are Antwerp and Ashqelon, in Israel. Antwerp's diamond¬
cutting and related trade is financed by the Banque Bruxelles-
Lambert, controlled by the Lambert family, the Belgian cousins

of the Rothschilds. Israel's (and also New York's) diamond busi¬
ness is financed by Bank Leumi. (8)

Within the individual centers, dealers trade among themselves
on such exchanges as the New York Diamond Dealers Club, the
Ramat Gan in Tel Aviv, and the Antwerp Diamond Bourse. No
written records are kept of any transactions on these exchanges;
the agreements are sealed with a handshake. No aspects of this
trade are available for scrutiny by law enforcement agencies,
even under American law, before the diamonds reach the jewelry
store level.

Hong Kong's own substantial wholesale diamond market is the
virtual monopoly of the Union Bank of Israel; this bank is wholly
owned by Israel's largest finance house. Bank Leumi. Bank
Leumi, in turn, is under the control of Barclays Bank, on whose
board sits Harry Oppenheimer and the Oppenheimer family
itself. Bank Leumi's own chairman is Ernst Israel Japhet, of the
Charterhouse Japhet family whose fortune derived from the
official British opium trade during the nineteenth century!

Ten times a year, representatives from the Ramat Gan, Tel
Aviv's diamond exchange, go with Union Bank financing to the
De Beers Central Selling Organization "sights" in London, and
purchase one-third of the world diamond output.

HOW THE DRUG EMPIRE WORKS

105

Like the Peking-British-controlled Ch'ao Chou Chinese net¬
works in the Far East, Britain's Zionist financiers are a cult unto
themselves, with their own family networks, cults, and language.
New York's diamond market consists, at the lower levels, mainly
of members of the extremist Hasidic sects resident in the area.
This exotic feature of the diamond traffic achieved public notor¬
iety after several unexplained thefts and murders occurred in the
diamond trade during 1977.

Although there is an apparent division of labor between the
Hofjuden precious metals and precious stones channels of the
world dirty money operation, the various firms involved are so
closely intermarried, interlocked, and interowned with the major
dirty money banks, that the working of the dirty money appara¬
tus is totally integrated.

A case in point is Canada, the dumping ground for all aspects of
Dope, Incorporated that feed into the United States. The Bank of
Nova Scotia, for example, is both the major gold dealer (and
banker for the second largest gold dealer, Noranda Mines), and
the major dirty money operator in the Caribbean.

The Nova Scotia is notorious for bribing its way into new
branch offices in the Caribbean, violating local currency laws,
running flight capital against currency restrictions, "investing"
in local businesses known to be intelligence fronts, and so forth.
Nova Scotia's branch network in the Caribbean is the largest of
any bank in the world, save Barclays which has a similar pedi¬
gree. Gold is a specially useful medium for the special case of the
Caribbean, where official restrictions make some bank transfers
difficult. Conveniently, Nova Scotia leads the Toronto gold
market.

The other leading gold market operator in Toronto is Noranda
Mines: its chairman Powis is a member of the board of directors
of the Bank of Nova Scotia. Powis is also a member of the board
of Sun Life Assurance, the Rothschilds' insurance company.

5

Hong Kong:
The World's Drug Capital

Illegal drugs are the biggest business in the Far East — and by
a close margin the biggest business in the world — but in Hong
Kong, drugs do not merely dominate the economy: they are the
economy. A look at the British colony of Hong Kong gives us a pic¬
ture in microcosm of the drug-dirty money economy worldwide.

First, start with the fact that Hong Kong is the most drug-
ridden place in the world, per capita. Official British police esti¬
mates have it that 10 percent of Hong Kong's population or 500,000
people, are hardcore addicts. Unofficialestimates run this figure
up to 50 percent. A safe, conservative estimate is 20 percent or 1
million people — more than New York City's addicts. Assuming
the daily cost of a serious opium or morphine habit in Hong Kong
to run to about $10 U.S., the annual cash-flow of retail drug sales
at HongShang’s back porch runs to about $3.7 billion.

As the region's central bank, the Hong Kong and Shanghai
bank provides banknotes to its clients, among other services. Any
reasonable estimate of Hong Kong's dirty money operations
including the retail drug trade, as well as the notorious bribes to
police officers, international drug wholesaling based on the

106

HOW THE DRUG EMPIRE WORKS

107

island, illegal gambling, and other forms of illicit transactions,
must yield a shockingly large number. With a drugged-up popula¬
tion of that size, the life of Hong Kong's population must be organ¬
ized around illegal activity.

Shifting focus to New York City for a moment indicates the
magnitude of the world's drug-centered illegal economy. Most
estimates put the city's addict population at 500,000 (and another
250,000 nationally). Assuming a $50 per day habit is average —
which the federal estimates apparently do — this addict popula¬
tion must obtain $9 billion a year out of New York City's faltering
economy to meet its needs.

Where does it get $9 billion? Not substantially through well¬
paying jobs. With rare exceptions that is physically impossible.
Not from muggings; however bad matters seem, neither 500,000
muggings, nor a combination of muggings and burglaries, take
place daily in New York City. Even prostitution could contribute
only a small portion of the $9 billion annual habit of New York
City's addicts.

Where does the money come from? From organized crime
activity: the numbers racket, bookmaking, protection rackets,
autotheft, stolen auto parts distribution, prostitution, pornog¬
raphy, arson-for-hire, and similar occupations. Drug addiction
could not possibly exist without organized crime to provide the
means of financing addiction.

The National Education Television's recent series on the nar¬
cotics trade demonstrated irremonstrable nerve by repeatedly
citing the view of the (well-paid) Royal Police of Hong Kong that
the narcotics traffic will always exist as long as there is a
market. The market for the worst form of human misery not only
is the most centrally organized of any market in the world, but
could not possibly exist in any other way. If the demand provokes
the supply, one might ask, why do narcotics wholesalers produce
roughly ten times what addicts can consume annually?

Hong Kong is the capital of the world's illegal drug economy.
This explains some of its most notable characteristics: the big¬
gest illegal market in dirty money, drugs, and gold; the world's
biggest liquidity ratio; and the world's biggest bribe rate.

The annual exports of the colony this year will be no more than

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DOPE, INC.

$8 billion; as we have seen, it will take in more than $10 billion in
drug and drug-related financial activity. There is no credence to
the myth that Hong Kong's economy is booming on the basis of
cheap electronics and textiles.

The illegal market

Apart from retailing and wholesaling of drugs, huge sectors of
the island's economy are indirectly dependent on the drug traffic.
Exemplary is the booming gold market, whose turnover doubled
from 305 tons in 1976 to 600 tons (worth $43.6 billion) in 1977. Some
several hundreds of millions of dollars of gold go directly to the
Golden Triangle; hundreds of millions more absorb and hide the
profits of drug traffickers across the Far East.

This is the place where the Hongkong and Shanghai Bank

smuggled gold openly for a quarter-century, rigs the stock mar¬

ket in full public view, and promotes Chinese smugglers to the
upper reaches of Hong Kong society. Nothing moves in the colony
without the knowledge and approval of the Hongkong and
Shanghai Bank and interlocked old-line opium trading com¬
panies. They set the island up as an opium center in the 1820s
when it was bare rock, and they run it now.

A Soviet commentator, M.A. Andreyev, wrote in 1974:

"In the Far East Hong Kong is the main center of illegal

operations in gold and foreign exchange. Large-scale illegal

transactions are carried on regularly there in Filipino pesos,
Indonesian rupees, Malay and Singapore dollars, Burmese kyats,
Thai bahts. South Vietnamese piastres, Cambodian riels, Laotian
kips, Chinese yuans, British pounds and U.S. dollars. The foreign
exchange transactions in Hong Kong daily involve several billion
U.S. dollars (the figure is a gross underestimate, even for 1974 —
ed.), with the larger part of these transactions carried on by busi¬
nessmen from Southeast Asian countries. On a lesser scale such
illegal transactions in foreign exchange and gold are conducted
in Singapore and Bangkok ....

"The overseas Chinese bourgeoisie actively finances the gold

HOW THE DRUG EMPIRE WORKS

109

and foreign currency operations in Hong Kong and on the out¬
skirts of Southeast Asia. Ever since the end of the Second World
War much of the migrating capital from China has been used in
the illegal gold and foreign exchange operations in Hong Kong.
U.S. economists note that in the mid-1950s most of these opera¬
tions in the Hong Kong black market were handled by Chinese
brokers. Chinese businessmen are even more active in the gold

and foreign exchange black markets in the Southeast Asian coun¬
tries. Regarding the part played by Chinese financiers in the gold
and foreign exchange market in the Philippines, a Hong Kong
publication (Wong Po-Shang, The Influx of Chinese Capital into
Hongkong since 1937— ed.) wrote: 'Besides remitting through
the regular free market, these people have made transfers of
their money by trade transactions and devious means as well as
by out and out smuggling. This is said to be the case with money
from the Philippines where large underground organizations are
said to be in operation with the object of helping to smuggle
funds, gold bullion and valuables out of the country.'" (1)

Andreyev adds: "Three types of transactions predominate
among the innumerable and varied black market gold and for¬
eign exchange operations. These are, first, the acquisition in the
local market of gold and foreign exchange (mainly U.S. dollars)

smuggled into the country concerned for local currency which
devalues quickly. Next, the smuggling of local currency over¬
seas, to countries with a relatively stable currency, for the subse¬
quent exchange of that currency for gold or hard currency.

Whereas these types of transactions involve the physical move¬
ment of gold and bank-notes from one country to another and are,
thereby, closely connected with smuggling (in all Southeast

Asian countries there are strict limitations on the inflow and
outflow of gold, foreign exchange, and local currency), the third
type of black market gold and foreign exchange operation is prac¬
tically not linked with the movement of bank-notes or gold from
country to country . . . (but rather with obtaining) funds in the
black market from local businessmen desiring to build up large
overseas hard currency or gold accounts.

"The existence of organizational links between numerous

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DOPE, INC.

Chinese companies in the different Southeast Asian countries
makes it possible to export Chinese capital from country to
country even without the physical movement of that capital.
Take, for instance, a Chinese firm with branches in Hong Kong,
Singapore, Djakarta, Kuala Lumpur and Bangkok. It can, if it so
desires, pay for its operations conducted in its behalf by its
Bangkok branch not through official channels but by transferring
the necessary sum of money in foreign exchange to that branch's
overseas bank account. In this case the Bangkok branch pays for
these operations from its local currency fund and in exchange
gets an addition to its hard currency account abroad." (2)

Highest liquidity ratio

Hong Kong's drug traffic and the regionwide illegal dealings
surrounding it undoubtedly account for the colony's chronic
excess of liquidity (see International Currency Review, vol. 10,
no. 4, for a descriptive analysis). Year-to-year growth in money
supply as of April 1978 was 25 percent; however, some of that is
attributable to inflows of foreign currency related to the opening
of an offshore Hong Kong bond market. Over the past 15 years,
the huge volume of external lending tended to suppress the other¬
wise huge money supply needed to finance several billions of ille¬
gal activity on an island whose repotted money supply is now
about $4.5 billion, U.S. Offshore business booked through Hong
Kong was formerly so large that the liquidity ratio of the banks
(taking into account both cash and rediscounted offshore bills of
exchange) stood at an extraordinary 50 percent. Most of the local
money supply was in the form of cash. (3)

In effect, the cash-based local drug traffic in Hong Kong
created a reserve base for offshore lending to finance the drug
traffic in the rest of Asia! Since 1975, however, the development
of the offshore bond market and the influx of foreign capital has
led to the reduction of the liquidity ratio to a still-extraordinary 43
percent.

Understandably, even public business practice in Hong Kong is
politically corrupt. The HongShang’s entirely open role in gold

HOW THE DRUG EMPIRE WORKS

111

smuggling between Hong Kong and Macao was noted above. The
London Financial Times of July 4, 1977 reported a 1977 scandal in
which Wheelock Maiden, a trading company listed on the Hong
Kong Stock Exchange, provoked an investigation by the Securi¬
ties Commission, after a "modestly optimistic statement" was
followed by "revelation of huge profits drop, dividend cut, write¬
offs and liquidity problems."

The Financial Times wrote, "insider trading is rampant . . ..
These flurries may be attributable to leaks by clerks, secretaries
and translators, rather than to insider trading at the top. But who
can blame these lesser lights when Mr John Maiden is still chair¬
man of Wheelock Marden, still sits on the board of the Hongkong
and Shanghai Bank, is still a pillar of 'respectable' colonial
society?" (4)

Biggest bribe rate

Law enforcement sources report that the "lesser lights" are
generally taken care of through the world’s most efficient
bribery system. At least $1 billion is passed out to Hong Kong's
officialdom.

According to a report in the same London Financial Times
article cited above:

" 'Perhaps a billion dollars a year flow into the syndicates,'
admits Mr Jack Cater, Hong Kong's head of the Independent
Commission Against Corruption (ICAC) started in February.
The sum gives one clue to the size of the problem the ICAC has to
tackle. Another, Mr Cater points out, is the extent of official and
in particular police corruption in the Colony. With membership
varying from 10 to 300, there are at least 28 identifiable public
sector syndicates, and 25 of them are in the Royal Hong Kong
Police Force ....

"The ICAC has considered about 9,500 reports on corruption,
about 85 percent of them involving Her Majesty's service.
Reports of police crime (4,000) have regularly accounted for
more than half the reports of government crime .... Mr Cater
has failed to bring back the many wealthy and mostly Chinese

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DOPE, INC.

non-commissioned police officers who left Hong Kong before the
ICAC cast its net." (5) (The largest concentration of the last-
mentioned is in Vancouver, British Columbia, where they are
still active in the narcotics traffic, according to law enforcement
specialists.)

The $1 billion figure cited can be counted as overhead on the
narcotics and related drug traffic in the area. Earlier, the local
Hong Kong retail drug traffic was estimated at about $4 billion,
and the area's drug wholesaling business at $3 million and more.
Assuming that bribes of police and other officials — what most of
the $1 billion cited represents — amount to no more than 10-15 per¬
cent of the volume of drug traffic, retail and wholesale combined,
then the estimates for the size of the drug traffic already made
are unquestionably on the low side. The $1 billion in Hong Kong
corruption annually estimated by the authorities — and it is not
likely that this estimate is excessive — indicates drug traffic in
and through Hong Kong of close to $10 billion, by ordinary reason¬
ing. That figure, of course, does not include bribes to customs
officials at Bangkok, Rangoon, Singapore, and elsewhere, let
alone bribes to Thai and Burmese army officials.

To the extent that limited efforts at giving the appearance of
honesty have come to pass in Hong Kong, both the police and the
Chinese expatriate community have risen in revolt against them.
Last year police rioted uncontrollably against so-called anticor¬
ruption efforts. The July 4, 1977 Financial Times account notes
that the crusade "enraged Chinese business in particular .... In
a rare display, the Chinese Manufacturers Association (pro-Pek-
ing) and the Kowloon Chamber of Commerce held a mass rally to
protest against 'interference in Chinese ancient customs.'" (6)

Such ancient customs indicate the nature of Hong Kong and its
bank. According to custom, no bribes are solicited, none offered.
Instead, couriers make their rounds through Royal Hong Kong
Police and other official buildings early each Monday morning,
leaving an envelope containing between one and five hundred-
dollar bills in the top drawer of every desk. Any policeman who
refuses to take his envelope will probably be dead within 48
hours, according to law enforcement officials.

The Peking Connection

Some of them (U.S. troops in Vietnam) are trying
opium. And we are helping them. . . . Do you remember
when the West imposed opium on us? They fought us with
opium. And we are going to fight them with their own
weapons. . . . The effect this demoralization is going to
have on the United States will be far greater than anyone
realizes.

Chinese Prime Minister Chou En-lai,
in conversation with Egyptian
President Nasser, June 1965 (1)

Only since Henry Kissinger's 1972 hip to China has the Chinese
role in the world opium hade been out of the headlines. The
American, European, Japanese, and Soviet authorities had long
insisted that Peking was a major primary producer and exporter
of opium and its derivatives, and the British, under exheme

113

114

DOPE, INC.

pressure from abroad, had to assent. The highlights of the public
record to this effect follow below in this section. However, even
the most compelling documentation of Peking's role in opium
production misses the point.

Red China's revenues from opium exports, as we will demon¬
strate, are a mere $800 million annually. Peking makes its real
profits in the wholesaling, retailing, and financing of the opium
traffic, mainly through Hong Kong, where the big money is
made. As noted in Section 4, the People's Republic of China has
taken active part in the gold smuggling side of drug financing in
the orient since 1950.

But since approximately the time of the Sino-Soviet split in the
late 1950s, Peking has deliberately integrated its external finan¬
cial affairs with the top British drug-running firms in Hong Kong,
and the expatriate Chinese drug wholesaling and dirty money net¬
works throughout the orient. Peking's financial policy coincides
with strategic commitment — stated unambiguously by the late
Premier Chou En-lai — to the full-scale use of the opium weapon
against the White Devils of the United States.

Peking's financial dependence on Hong Kong is a matter of
public record. On Oct. 2, 1978, Chase Manhattan Bank's news¬
letter East-West Markets estimated that the financial flow into
mainland China this year (excluding exports) through Hong
Kong would total $2.5 billion, up from $1.3 billion in 1977. This
$2.5 billion includes income on Peking's foreign investments in
Hong Kong and other Southeast Asian centers, plus remittances
back to relatives on the mainland from Chinese expatriates.

Apart from the purely financial offtake, most of Red China's
exports pass through Hong Kong. In 1976, Peking earned $2.4
billion in exports through the British colony, or sufficient to cover
40 percent of the PRC's total import requirements for that year.
Peking does all its banking through Hong Kong, largely through
the Hongkong and Shanghai Bank, and secondarily through the
Standard and Chartered Bank. Peking conducts all its invest¬
ments abroad through Hong Kong. That dependency is not
merely established, but is increasing markedly.

The astonishing $2.5 billion financial reflow back to the PRC
this year represents the fruits of Peking's 20-year-old program of

HOW THE DRUG EMPIRE WORKS

115

moving into the higher echelons of the drug traffic, by agreement
with the British. Combining American and Soviet sources, we
will demonstrate that this estimation of foreign drug revenues
through Hong Kong is a good approximation of Peking's income
from drug wholesaling, retailing, and financing, as well as
gambling, real estate, and other shady joint ventures with British
and expatriate Chinese finance, closely related to the drug trade
proper.

Even the $2.5 billion figure does not include the $800 million
Peking earns as a primary opium producer. To estimate
Peking's gross revenues from the drug traffic, an additional sum
of several hundred millions of dollars must be added: the over¬
head cost of maintaining one of the largest and best-financed
intelligence and sabotage operations in the world, the Chinese
Communist Intelligence Service (CCIS).

In summary, we will demonstrate that the People's Republic of
China is a 40 to 60 partner with the British oligarchy in the Far
Eastern narcotics trade.

OLD TIES GROW STRONGER

Peking's current policy represents a direct line of continuity
between the current regime and Britain's 19th century corrupt
collaborators in China. Correspondingly, the fortunes of the
Maoist Great Han Chauvinist faction in Peking are linked to the
opium trade and the British oligarchy. They have staked China's
economy — its capacity to import urgently needed foreign goods
— on the opium trade.

In consequence, the factional importance of the opium issue
inside China is enormous. One unmistakable indication that
reached Western view is the peculiar case of the Chinese-made
film The Opium War, now distributed throughout the West. The
Opium War uses the 19th century events as a parable for contem¬
porary China. The villains of the film are not so much the British,
but the corrupt Chinese who enable the British to win the Opium
Wars, by preventing the Emperor and his loyal intelligence chief
Lin Tse-hsu from repelling the White Devils. The film was
initially banned by Madame Mao and the rest of the "Gang of
Four," allegedly because hero Lin Tse-hsu was an oblique refer-

116

DOPE, INC.

ence to Gang of Four opponent Teng Hsiao-p'ing. Some

observers, however, have speculated that the banning was

related to a raging political battle over Peking involvement in
drugs.

What political fireworks ensue every time a Japanese trade

delegation, export-financing agreements in hand, shows up in

Peking, can only be imagined. Japan's economic approach to
China, embodied in the recent Sino-Japanese treaty, offers the
PRC an alternative to dependence on drugs and the British. Cor¬
respondingly, the Japanese approach gives the anti-opium group
in the PRC powerful factional arguments.

Despite the Japanese initiative, however, Peking's policy has
taken dramatic new steps toward economic integration with
British Hong Kong.

Among the first major foreign credit arrangements the Peking
government has accepted was a $200 million deposit last summer
in the Bank of China by a consortium of banks led by Standard
and Chartered. Then, in October 1978, the venerable opium
traders Jardine Matheson concluded a $300 million agreement
with PRC firms in Hong Kong to develop a real estate complex
adjoining a branch station of Hong Kong's new mass transit
system. Apparently, the joint investment came as part of a
package deal including the largest-ever export package to China,
also announced at the beginning of October by Jardine Matheson,
which handled the negotiations on behalf of a consortium of
British firms. The $300 million real estate development in Hong
Kong's New Territories includes an 80 percent stake on the part
of two PRC-owned firms in Hong Kong, the Sun Company and the
Kui Kwing Company; a 15 percent stake from the Hong Kong
Land Company Ltd., headed by Jardine Matheson’s ex-chairman
H. N. L. Keswick; and a 5 percent share from Jardine Matheson
itself. (2)

The extraordinary leap in Peking's investment income in and
through Hong Kong, and the haste in opening new operations in
common with the British, including Peking's official entry into
the Hong Kong gold market, mean one thing: Peking and London
are jointly preparing a massive expansion of the opium and
heroin traffic. Apparently, the market research that Dope,

HOW THE DRUG EMPIRE WORKS

117

Incorporated conducts in the United States shows that the push
for decriminalization of drug use could open the U.S. market up
like a clam.

In this section, we will show:

(1) The content of Peking's activities in Hong Kong;

(2) The documented record of Peking support for the drug
traffic;

(3) The activities of the grossly underestimated Chinese Com¬
munist Intelligence Service (CCIS). Peking intelligence and the
expatriate, largely Ch'ao Chou Chinese networks who handle the
drug traffic are the same entity. As we demonstrated in Section 3,
the expatriate networks operate under financial control from
London. In fact, the entire operation of these networks runs
through Peking-London joint ventures.

Then, in the next section, we will report how the Royal Institute
of International Affairs — which makes policy for the HongShang
and the rest of the British banking establishment — negotiated
the continuation of the old Anglo-Chinese drug traffic at the end
of World Warll.

"Communist fat cats"

London's current view of Hong Kong's relationship to the main¬
land is rosy. "By its acceptance of the status quo, China shows
that it is happy to keep the Kong Kong show on the road," wrote
the London Financial Times. "The existence of the communist
banks (in Hong Kong) is an indication of the continuing commit¬
ment, as the establishment of a machinery manufacturing plant
on Tsing Yi island, one purpose of which is to modify mainland
machinery which fails to meet the requirements of potential
buyers in the region.

"This sort of commitment is understood by even the most
nervous businessmen and helps remove the cloud of uncertainty
which would otherwise start to gather. ... It may be the final
irony of the Hong Kong paradox that to ensure Hong Kong's well¬
being, Peking will have to increase its own investment and
participation in the colony." (3)

118

DOPE, INC.

The same Financial Times report then specified what it meant
by increased Peking participation in the colony, citing the
exemplary case of a leading Hong Kong and Macao entre¬
preneur, Mr. Stanley Ho:

"It is a widely accepted allegation that Mr Ho and his partner,
Mr Henry Fok, started their fortunes at the time of the Korean
War running strategic materials into China. Certainly, both men
became prominent during that era of smuggling. Indeed, Mr Ho
seems to have weathered the 1967 riots (following the Cultural
Revolution — ed.) without taking sides, and he even managed to
bolster his friendship with Peking authorities. The relationship,
and Mr Ho's wealth, can be traced to the award of China's sand
monopoly in Hong Kong to his partnership with Mr Fok. Later, in
1962, Mr Ho was awarded the 25-year gambling franchise in
Macao, where he had worked during World War II for a Japanese
company. It is fair to say that the gambling franchise was a
present from Peking."

The Financial Times could have cited other cases, like the
Shaw Brothers (Anglicized Chinese name), Hong Kong's
premiere producers of Kung Fu films for distribution throughout
the world. Apart from their chain of theaters in Chinese com¬
munities across the world, the Shaw brothers control most of
Hong Kong's prostitution. (4)

In any corner of the world but Hong Kong, Peking's relation¬
ship to the British elite — Peking-owned businessmen and British
bankers rub shoulders in the Hong Kong Jockey Club and other
havens of Hong Kong's elite — would be a source of international
outrage.

Peking controls the Chinese General Chamber of Commerce in
the colony, the same organization that organized riots in 1977 to
protest the Independent Commission Against Corruption's
"interference in the ancient Chinese practice" of bribing police
officers. Its chairman. Dr. Wang Kwan-cheng, is a frequent
visitor to the mainland, and has been identified in intelligence
reports as a PRC political intelligence operative. Wang's position
has been described as "the most prestigious in the colony, along
with the British Governor-General." Among other things, Wang
is among the wealthiest men in Hong Kong, with interests in the

HOW THE DRUG EMPIRE WORKS

119

retail trade, restaurants, real estate, and transportation. Accord¬
ing to his entry in Who's Who in Hong Kong, Wang is "chairman
of the Board of Directors of Magna Development Company,
Chinese Arts and Crafts (Hong Kong)," and a member of the
Hong Kong Jockey Club.

The vice-chairman of the Chinese Chamber of Commerce is C.
H. Kao, who, like Macao gambling czar Stanley Ho, amassed
great wealth by running strategic materials into China during the
Korean War. Other known Peking agents include Ho Yin, chair¬
man of the Macao Chamber of Commerce, and Macao's repre¬
sentative to the PRC’s People's Congress, the organization that
centralizes the political activities of Chinese expatriates through
Peking (see below). Another is K. C. Jay (or Choi), formerly with
the Bank of China in Peking, and currently a resident financial
intelligence operative and currency specialist for the Bank of
China in Hong Kong.

As Richard Deacon, the British author of The Chinese Secret
Service, puts it: "What is abundantly clear is that Peking has a
great reservoir of strength and talent among its supporters in
Hong Kong. Its Secret Service activities there are low-key, as in
many other centers, and have avoided clashes with the author¬
ities. Indeed the only espionage scandals to break in the colony
for several years past are attributable to other powers alto¬
gether, some of them at least manufactured by the Chinese to em¬
barrass another nation. Perhaps the subtlest of these was when in
1973 a Chinese Intelligence agent tipped off the British about two
K.G.B. agents, who had been taught Chinese at the University of
Vladivostok, arriving in Hong Kong. In their possession were
found documents containing valuable information about the
Soviet espionage network in the Far East."

And as Deacon remarks, "There may even be some unofficial
contacts on an intelligence level between the British and Chinese
secret services. . . ." (5)

Deacon also reports that when China's narcotics smuggling
operations were at their height, they were controlled by the
Central External Liaison Department and the Ministry of
Investigation. According to Deacon, the major secret agents
were employed through the pro-Peking China Sailors' Union in

120

DOPE, INC.

Hong Kong. The union was responsible for bringing in a large
shipment of heroin discovered by the New York police in January
1973. "The International United Front operations, controlled by
the CFLD, included drug-pushing with the aim of creating disrup¬
tion and demoralization in carefully selected target areas
indicated by the CFLD."

Deacon adds: "From Italian sources, diplomatic and other¬
wise, comes confirmation that the heroin traffic between Hong
Kong and Europe is master-minded by Chinese secret agents. It
is even suspected that there may have been undercover deals be¬
tween the Chinese and the Mafia for distribution of the stuff."

Deacon identifies Keng Biao as the chief of the cited Central
External Liaison Department. Whether Keng, in fact, coordi¬
nates Chinese drug-pushing cannot be independently corrobor¬
ated at this time. Since the 1974 publication of Deacon's account,
however, Keng was elevated to the Politburo, China's highest
political body, in August 1977. In August 1978, he toured some of
the prime marijuana-growing regions of the Caribbean, includ¬
ing Jamaica. Keng also stopped in the island of Malta, the old
base of the drug-pushing Maltese order, for unexplained reasons,
on his return home.

The renowned Mr. Stanley Ho, mentioned above, who as con¬
troller of Macao gambling is the proprietor of what law enforce¬
ment agencies consider the world's dirtiest financial operation, is
a bona fide member of Hong Kong's social elite. Macao's
relationship to Peking became a public scandal in 1974, when the
revolutionary Portuguese government offered to cede the colony
to PRC. The Peking government refused, because Macao is much
more useful to Peking as a source of illicit foreign exchange earn¬
ings through opium and other forms of smuggling than as a
people's commune. (6)

Only in rare instances have the links between the Hong Kong
opium firms, British intelligence, and the Chinese Communist
Intelligence Service come to public light. Where they have, the
results put the best pulp thrillers to shame. One illustration is
the story of the luckless Rennie family, Scots traders who sold
their operation to Jardine Matheson in 1975. The Rennies are old
Africa and Asia hands both in merchant ventures and the British

HOW THE DRUG EMPIRE WORKS

121

colonial service, with major operations in South Africa, through
Rennies Consolidated Holdings Ltd. (7) A relative. Sir John
Rennie, resigned as head of Britain's foreign secret intelligence

organization DI6. Normally the identity of the chief of DI6 — "M"
in the James Bond movies — is one of Britain's best-guarded
secrets. But Rennie's identity came to light after his son, Charles
Tatham Ogilvy Rennie, was arrested for heroin trafficking in

London on January 15,1973. Official British press censorship, the
infamous "D-notices" sent to newspaper editors, delayed press
coverage of the blue-blooded drug bust until February 7, 1973,
when London's Evening Standard reported that "the previously
unnamed son of the head of D16, who is facing drugs charges in
London, is Charles Tatham Ogilvy Rennie."

Significantly, on the same day West Germany's Stern

magazine blew Sir John Rennie's cover — in a dispatch from
Hong Kong, the base of the Rennie family's business partners,

Jardine Matheson. Stern magazine's information could have

come either from Rennie family channels through Jardine
Matheson, or through the Chinese Secret Service, or both. Ac¬
cording to a Chinese Communist intelligence source cited by a
British author, "In the case of Sir John Rennie I believe the
Chinese were so cautious that they refused to accept their own
suspicion (that Rennie was head of DI6) for a long time.
Confirmation finally came when Sir John's son was arrested.

They did not have far to look as his son's wife used Gerrard Street
— almost a 100 percent Chinese quarter of London — as a rendez¬
vous for obtaining Chinese heroin." The British author, Richard
Deacon, commented, "I suspect that some of the leakages to the
press of this information came from the Chinese, who have a very
high regard for the British Secret Service."

Of course, nothing is proven; British author Deacon guards his

version of this story with an elaborate description of the Chinese

Communist Intelligence Service's purported method of discover¬
ing the chiefs of British intelligence branches through a careful
reading of Who's Who. Nonetheless, we have the fact that the
head of DI6 was a member of a family with intimate business ties
to the core of the Hong Kong drug traffic; that his son dealt in
narcotics through Peking intelligence agents in London; and that

122

DOPE, INC.

the ultimate public announcement of his son's arrest came via
Hong Kong sources, either British or Chinese.

More recent events provide a useful epilogue. On September 2,
1978, the London Economist reported, "One after another, top
South African businessmen have been falling foul of the country's
strict foreign exchange laws. This week's man in the spotlight
was Mr Charles Fiddian Green, chief executive of the country's
leading transport conglomerate, Rennies ... He was convicted of
currency offenses on Aug. 29 and fined Rand 10,000.

"Last week Mr Gordon Rennie (Sir John's relative and Rennie
Consolidated chairman) cut his throat and wrists after police
came to talk to him. He went to hospital and was charged with
currency offenses. Four other Rennies executives have been
questioned by police; another has already been charged with
currency smuggling; and two, including Mr Laurence Parry,
have been sacked after apparently leaving the country." (8)

Also significant is the implication of Laurence Parry in the
recent Rennies scandal; Parry was chief of Rennies Holiday Inn
franchise in Swaziland and Lesotho, where rich South Africans,
spend weekends gambling and watching fleshy floorshows that
are prohibited in puritan South Africa. Rennies, since 1975 a 53

percent owned subsidiary of Jardine Matheson, has an almost

classical dirty money profile, apart from its casino-gambling and
fleshpot operations. Rennie's subsidiary in the security field.
Fidelity Guards, is South Africa's leader in armored car services
and payroll preparations, including its own computer facilities —
tailor-made for the currency smuggling operations of which
Rennies has just been accused. In addition, Rennies owns its own
air and cargo shipping facilities, making it the leading transport
group in South Africa. (9)

At the time of Rennies' merger with Jardine Matheson, South
Africa's magazine Management wrote, "For both, it's a getting
together of like people, like lifestyles, and remarkably similar

management philosophies. Good solid Scots tradition abounds in
both groups." Apart from its affinity to the leading Hong Kong
dynasty, Rennies is part of the South African mining estab¬

lishment. Two of its board members, the just-arrested Charles
Fiddian-Green and Fred G. Wolmarans, were previously senior

HOW THE DRUG EMPIRE WORKS

123

officials of Consolidated Gold Fields of South Africa. Consol¬
idated Gold, as quoted extensively in Section 4 above, wrote the
book on currency smuggling — literally.

THE MONEY LINKS

The PRC's financial intimacy with Hong Kong is a matter of
public record. (Less public is the PRC's relationship to the
Bangkok connection noted above, the seven-year residency of
drug financier Chin Sophonpanich in Peking.)

The PRC's roughly $3 billion in foreign exchange reserves are
banked through HongShang, Standard and Chartered Bank, and
other British banks through Hong Kong. In 1978 Peking began
large purchases of gold through the Hong Kong gold market,
according to the London Economist's Financial Report. (10)

The International Currency Review reported in September
1978: "China's increasingly open economic policies are likely to
have a further impact on other Hong Kong balance-of-payments
items . . . the Bank of China's announcement in early July that
the 13 Communist-owned banks in Hong Kong would be able to
purchase bullion, deventures and possibly equities, should
generate further hard currency revenue for Hong Kong's
financial community — and will also probably encourage a great
deal of additional business. . . . The Chinese Government's initia¬
tive in this connection represents one of several financial liberal¬
izing measures recently implemented by Peking. In June, for
example, the Bank of China and the Vanying Bank issued guar¬
antees for a real estate project in Tsuen Warn, located in the new
territories." (11)

Peking's opium weapon

Gold trading, banking, property, gambling — and roughly half
of Peking's foreign trade. That is the bottom line of the Peking
investment in Hong Kong. Since the early 1950s, it was the official
view of American law enforcement agencies that Hong Kong was
the main outlet for heroin grown in Red China. In 1961, just before
the Kennedy Administration kicked him out, U.S. Narcotics

Other

$5 BILLION

Bribes $1 BILLION

Chinese C ommumsl

Intelligence Service Overhead $S(X) Million

Chinese Expatriate
Remittance to PRC
$2.5 BILLION

S5W Mil l.ION

to PRC

5500 MILLION

others

Figure 5

Hong Kong and Peking: Sharing the Drug Take

Roughly $10 billion annually passes into and out of Hong Kong as payments
related to the production and wholesaling of illegal opium. Of this,
something under half is paid to or at the disposal of the People's Republic of
China. The involvement of the Chinese Communist Intelligence Service in
the dope trade may be considered self-financing, at a minimum; the Chinese
also receive something on the order of a $.5 billion directly for opium¬
growing. By far the largest part of Peking's drug-take assumes the form of
remittances to the mainland by overseas expatriate Chinese, the bulk of this
$2.5 billion accounted for by those Ch'ao Chou drug-financiers and others in
the Southeast Asian orbit of Britain's Hongkong and Shanghai Bank.

HOW THE DRUG EMPIRE WORKS

125

Bureau Chief Harry Anslinger stated, "One primary outlet for
the Red Chinese traffic has been Hong Kong." 02)

The police blotter's record of Red Chinese opium traffic
through Hong Kong is comprehensive. Even the British and Hong
Kong police have been forced, on occasion, to admit this is the
case. Scotland Yard attributed a large quantity of heroin seized
in a 1969 bust in London's West End to PRC shipments through
Hong Kong. On Oct. 15,1970, the chief of Hong Kong's notoriously
corrupt narcotics bureau, Shih Tieh-pi, told a press conference
that his force had confiscated 10,500 pounds of raw opium, 320
pounds of heroin, and 250 pounds of morphine, all of Red Chinese
origin, during 1969. The quantities just cited compare
dramatically with the largest-ever U.S. bust of heroin — the so-
called French Connection bust involved a mere 100 kilo¬
grams. (13)

Without knowing the quality of the heroin seized, or the
veracity of Mr. Shih Tieh-pi, comparisons are difficult. But if the
320 pounds of heroin seized so close to the original source were
fairly pure, which is likely, and the rule of thumb applies that
roughly one-tenth of illegal narcotics shipped are seized by police
— then 3,200 pounds of heroin passed through Hong Kong in 1969.
That is roughly what American narcotics addicts consumed in
1969.

The PRC's Hong Kong connection is not a matter of con¬
venience, but the expression of a quarter-century-long policy
agreement between the Peking government and the highest
levels of the British oligarchy. The best-known source for the
unexpurgated views of China's elite is A1 Ahrarn editor Moham¬
med Heikal. Heikal reported the following 1965 conversation
between Nasser and visiting PRC Prime Minister Chou En-lai:

"One of the most remarkable statements Chou En-lai made on
that evening (June 23, 1965 — ed.) during our discussion of the
demoralization of American soldiers was that: 'Some of them are
trying opium and we are helping them. We are planting the best
kinds of poppies especially for the American soldiers in
Vietnam.' Nasser appeared to be somewhat disturbed, but Chou
continued: 'We want them to maintain a large army in Vietnam
that will serve us as a hostage, and we wish to demoralize the

126

DOPE, INC.

troops. The effect of this demoralization on the United States will
be much greater than anyone can imagine.' Nasser thought that
Chou might be exaggerating somewhat, but Chou's concept was
clear. He left no doubt that this was his course of action." (14)

The Soviet government newspaper Isvestia of Feb. 17, 1978
cited a Chou En-lai speech in Wuhan in 1952 elaborating the same
policy. According to Isvestia, the Chinese Prime Minister said:

"We are trying in every way to support the creation of opium
poppy plants. From the standpoint of the revolution, opium is one
of the means of helping the revolutionary cause and must be used
actively. If the question is approached from a class standpoint,
opium is one of the most powerful sorts of weapons of the prole¬
tarian revolution. ... It is extremely important for us to export
morphine and heroin in big quantities, use them to weaken the
combat strength of the enemy and destroy the enemy without
entering into war with him."

Whether or not the Soviet citation is accurate, the views
expressed coincide with those reported by observers such as
Heikal, who is far from pro-Soviet or anti-PRC, and conform to
the practice of the PRC and its secret service, the CCIS.

Ironically, the British were quick to point an accusing finger at
the PRC when it benefitted their policy, during the Korean War.
In 1950, the British Mission to the United Nations made public a
PRC offer to sell 500 tons of opium grown in Jehol (North China)
and in storage in Canton, to a firm in Hong Kong. The British
Mission said that the offer had been refused.

FROM HONG KONG

Until the "China Card" strategic policy found favor in
Washington under Kissinger, the official American view, among
others, was that the PRC grew and exported large quantities of
opium. Harry Anslinger, the first chief of the U.S. Federal
Bureau of Narcotics, said in 1961: "Heroin made in Chinese
factories out of poppies grown in China is smuggled into Hong
Kong and onto freighters and planes to Malaysia, Macao, the
Philippines, the Hawaiian Islands, the United States, or, going
the other direction, India, Egypt, Africa, and Europe. A prime
'target area' in the United States was California. The Eos Angeles

HOW THE DRUG EMPIRE WORKS

127

area alone probably received 40 percent of the smuggled contra¬
band from China's heroin and morphine plants. The syndicate
crowd does not object to dealing with the Reds as long as the
profits are big in terms of dollars." (15)

U.S. investigators have only succeeded in putting heat on the
Hong Kong authorities, provoking token busts of local drug opera¬
tions. The last major scandal raked up by American authorities
— immediately before the "opening to Peking" slammed the lid
down on further action — came in 1973, when U.S. Congressman
Lester Wolff visited Hong Kong on behalf of the House Select
Committee on Drug Abuse. Citing the Nixon Administration's
effective crackdown on Turkish heroin entering the U.S. East
Coast through the so-called French Connection in Marseilles,
Wolff charged, "All the narcotics entering the United States must
be coming from somewhere else, the center of which is Hong
Kong." (16)

The Japanese authorities held the same view. Susai Sugahara,
head of the Japanese Narcotics Bureau, maintained that China
was the largest opium producer in the world. Taking the export
figure Sugahara cited, the Soviet commentator V. Ovchinnikov
estimated in 1964 that one-third of PRC opium production went to
Japan. According to the Japanese Narcotics Bureau, the PRC
was the source of the major influx of opium into Japan that began
in the early 1950s, producing an estimated 40,000 addicts as of
1953. (17)

In 1969, the Soviet monthly Liternatura Gazyeta estimated
Chinese opium export earnings at $500 to $800 million per
annum. (18) There is no way to confirm this report, and Soviet
estimates (as well as Taiwanese) of the size of the PRC's opium
crop unquestionably exaggerate in many instances. However,
there is a strong element of credibility in the 1969 Soviet report:
the $500 to $800 million is within the range of the $1 billion
estimate developed independently (see Section 2) for the primary
wholesaling revenue of the Far Eastern opium traffic. The Soviet
estimate corresponds closely to what may be readily deduced
from hard law enforcement agency data.

Why has no action been taken against Hong Kong, when the
evidence is so well known? There are two reasons. First, no

128

DOPE, INC.

American law enforcement or intelligence agency has ever had
operational access to Hong Kong. Hong Kong, as British ter¬
ritory, was strictly off limits to American investigators. To our
direct knowledge, American intelligence never tries to circum¬
vent this feature of the "special relationship" between Britain
and the United States. Secondly, the courageous work of Harry
Anslinger and other American narcotics officials did succeed in
putting some heat on the rotten little island. The British seizures
of narcotics cited earlier are an indirect result of the pressure
applied, in the context of Nixon's war against drugs.

The more important reason is that, to a great extent, the actual
refining of heroin — which moved lock, stock, and barrel to Hong
Kong from Shanghai after the Communist takeover in 1949 — is
no longer done in Hong Kong. Rather, Hong Kong's importance is
overwhelmingly in the sphere of dirty money operations, and
secondarily in transshipment of heroin. The great shift of the
production-refining cycle from the Shanghai to Hong Kong route
to the Golden Triangle (including substantial portions of China's
Yunnan province) occurred in the context of the Vietnam War.
Vietnam, which Britain successfully advised the United States to
enter, provided a gigantic captive market with easy access from
the Burmese-Thai-Laotian growing areas, some of which had
already grown substantial quantities of opium dining the British
colonial period.

For whatever reason, American intelligence ignored field
reports throughout the 1960s that indicated a gigantic

step-up of Peking's narcotics trafficking. One of the most
extraordinary of the stories that got lost in the intelligence bur¬
eaucracy involved an airfield in northern Laos, 75 miles south of
the PRC border, built by PRC troops during the summer of 1964.
According to American intelligence sources, the airfield
appeared in Phong Sally province, between Luang Prabang,
Thailand's religious capital, and the border of Red China's

Yunnan province. Meo guerrillas operating in the area under
American direction discovered the Chinese building the airstrip
far into Laotian territory, and repotted back in June 1964.
However, the intelligence chain-of-command showed little
interest in those reports. An enterprising mercenary pilot flying

HOW THE DRUG EMPIRE WORKS

129

a T-28 aircraft obtained clear-as-daylight reconnaissance photo¬
graphs of the airfield, including shots of Chinese soldiers pushing
wheelbarrows. The photographs were duly sent through
channels, where they disappeared. American officers, however,
believed that the airstrip was intended to link up with an asphalt
highway the Chinese had been building from Yunnan province
into northern Laos for some time. Initially, thinking among
American intelligence officers centered on the possibility that the
airstrip had been intended as a forward fighter base for PRC
involvement in the Indochinese conflict. Only later, when no
Chinese fighters appeared, did the truth emerge: the Chinese
road and connected airstrip were built to ship opium out of
Yunnan province.

American investigators, who have always viewed the drug
traffic from the bottom levels upward, never "cracked" the con¬
trolling financial relationship that Hong Kong exercises over the
traffic.

The Ch'ao Chou connection

The key to the Far Eastern drug traffic — the link that ties the
entire operational picture together — is the Chinese expatriate
connection. As noted in Section 3, law enforcement investigators
have known for years what the Ch'ao Chou Chinese networks
were up to. But the law enforcement agencies never followed
through the maze of financial connections: to do so would have
violated standing American intelligence agreements with British
intelligence.

Crucial clues to the inner operation of drug traffic — the joint
operations of the Chinese Communist Intelligence Service
(CCIS), British intelligence, and Chinese and British finance —
have been gathering dust in police files for years. One such clue is
the 1972 arrest of a Chinese Communist Party official in
Djakarta, the Indonesian capital, in 1972. The Indonesian authori¬
ties arrested a Ch'ao Chou Chinese, complete with Chinese Com¬
munist Party card and other documentary evidence, in posses¬
sion of 30 kilograms of heroin — worth between $60 and $150

130

DOPE, INC.

million in terms of American street value, depending on the
quality. The investigation, employing the combined efforts of

Indonesian and American drug enforcement officials, showed
that the purpose of the heroin imports was the financing of the
Indonesian Communist Party (PKI) through the creation of a
drug ring in Djakarta. (19)

An interview by a U.S. Labor Party investigator with a

Malaysian intelligence source made in November 1978 is worth
printing in full here for the insight it gives into this particular
type of operation:

Source: It is definitely a fact that China distributes nar¬

cotics to its fraternal Communist parties in Southeast Asia
as a means or raising funds for their activities. The most

recent case is that of North Korea. Their diplomats have
been kicked out of several European countries for smug¬
gling and distributing heroin. Opium is not grown in North
Korea. It is obviously given to them by the Chinese. In
Singapore Communist agents were reported selling

narcotics to American students at the American school for
lunch money. Imagine, they were giving fixes out for 20 or

30 cents — just to get the kids hooked for their return to the
U.S.

Question: Can you substantiate that?

Source: It's on the Singapore official record. There is

more information at the local Kiwanis Club. They keep a
file on narcotics. Also there was a DFA report written on
how the PRC distributes narcotics through local party
functionaries in the region. The report was never released

but photostats exist.

Question: There is a lot of accumulated evidence that the
Hongkong and Shanghai Bank is at the center of the entire
Far Eastern narcotics trade.

Source: HongShang is the largest bank in the region and
particularly in Singapore. China's biggest agent is Pang
Hock-lint. He is instrumental in trafficking Chinese opium
into India, Thailand. Singapore, and Malaysia.

Question: Has he been arrested?

HOW THE DRUG EMPIRE WORKS

131

Source: Sure. He's been arrested plenty of times but
every time a fix is made and he is released.

Question: Who makes the fix?

Source: He's directly linked with the Hongkong and
Shanghai Bank. That's a fact.

A handful of similar incidents are on record. At the same time,
American policy busted a Filipino diplomat carrying seven
pounds of pure Number Four white heroin in his country's diplo¬
matic pouch. He had been followed from the Philippines to a New
York City hotel room. His contact man, arrested with him, was a
Ch'ao Chou Chinese.

One of the very few things that American intelligence knows
about the CCIS is that the majority of its operatives are ethnic
Ch'ao Chou. The Ch'ao Chou — as in the case of leading Bangkok
banker Chen Sophonpanich — are also the leading element in the
expatriate Chinese community involved in the drug traffic. (20)

Published Soviet material documents the spider's web of links
between the Peking government and expatriate Chinese; the
cited M. A. Andreyev's recent book. Overseas Chinese Bour¬
geoisie — A Peking Tool in Southeast Asia, is the most compre¬
hensive Soviet source available. What the Soviets either do not
know, or have not chosen to publish, is that joint Chinese
expatriate-British financial operations in the world narcotics
traffic hold the entire stpucture of Chinese foreign intelligence
together.

The Chinese expatriate population's close ties to the Peking
regime are well documented. According to a British author
writing in 1965, two-thirds of the Chinese expatriates in Southeast
Asia supported the Peking regime, and only one-third
Taiwan. (21) American authors like A. Doak Barnett have
drawn the same conclusion. (22) These impressive figures are
the result of assiduous cultivation of such ties on the part of the
Peking government.

Peking's insistence on the continuity of ties between the 12
million Chinese residing abroad and the Great Han motherland
is a matter of public record, and achieved notoriety through
such incidents as the recent border disputes with Vietnam.

132

DOPE, INC.

Andreyev complains, "Under the 1954 Constitution the overseas
Chinese have 30 representatives in the National People's
Congress, the highest legislative organ in China. ... In 1953,
representatives of overseas Chinese supporting the people's
democratic system and actively opposing the Chiang Kai-shek
regime met in Peking, where they had a preliminary discussion
on the procedure for nominating deputies to the National
People's Congress from the Overseas Chinese. . . An enlarged
sitting of the Overseas Chinese Affairs Committee, held in
Peking in July 1954, was attended by 195 representatives of
Chinese living in different countries. This meeting delegated 30
representatives of the overseas Chinese to the National People's
Congress." (23) At that time, the Chairman of the Overseas
Chinese Affairs Committee declared that "no one can rupture the
bonds linking overseas Chinese with their homeland. China is the
motherland of all overseas Chinese." Peking policy, as stated
publicly, has not changed through to the present.

Andreyev documents a complex, tightly knit web of Peking

connections to the expatriate Chinese, including foreign invest¬
ment, trade, and, perhaps most important, expatriate remit¬

tances to relatives in the PRC. Andreyev writes, "By agreement
with the Bank of China, two British banks — the Hong Kong and
Shanghai Banking Corporation and the Chartered Bank — with
their large network of branches in Southeast Asia — handle the
remittances of overseas Chinese to China." (24)

The system of remittances from Chinese residents abroad to
families on the mainland, and the more recent system of joint

investments between the Peking regime and Chinese expa¬

triates, are not only a major source of foreign exchange for China;
they are the financial infrastructure of Chinese secret intelli¬
gence. The network of financial ties between Peking and the
expatriates overlaps the networks that control the wholesale
drug trade in the Golden Triangle.

Several examples make this conclusion inevitable. One is the
cited fact that the biggest dope financier in the region, Bangkok
Bank chief Chin Sophonpanich, fled a fraud charge in Thailand
and spent the next seven years in Peking; since his return,
Sophonpanich has kept up close contact with Peking. But the

HOW THE DRUG EMPIRE WORKS

133

most compelling evidence is the structure of the remittances
transfers which — as noted — channel through the Hongkong and
Shanghai Bank.

The cited Soviet commentator argues that the standard
estimates of the flow of remittances back to China, which run to a
few tens of millions of dollars a year, are grossly inadequate.
"Most of these evaluations," Andreyev wrote, "are based on at
least three assumptions. The first is that all the foreign exchange
and commodities are sent via Hong Kong. Actually, this is not
true. In particular, this assumption ignores Macao, through
which pass considerable quantities of overseas Chinese capital.
Moreover, in Southeast Asia and Hong Kong there are a number of
official PRC agencies that have the possibility of secretly sending
large sums of money directly to Peking. Considerable possibil¬
ities are opened for this by China's commercial dealings with
Southeast Asian countries, and Peking, evidently, uses these
possibilities." (25)

Andreyev continued, "Lastly, along the poorly controlled Sino-
Burmese border there, probably, are loopholes through which
considerable material values can drain to the PRC, at least from
the countries in the Indochinese Peninsula. This is borne out by
the flow of gold to China across that border." (26)

That report — matching the earlier-cited Isvestia estimate that
the PRC's opium earnings were $500 to $800 million — is entirely
credible, when matched to related evidence. This is in the
general range of what the PRC's "take" should be if our earlier
chain of evidence holds up. The Burmese border area is the ulti¬
mate destination of much of the gold that passes through the
HongShang’s gold market in Hong Kong, through the myriad of
small Chinese banks. (With the 13 PRC-owned banks in Hong
Kong now operating in the gold market, the PRC will be able to
take an additional cut, in the form of trading commissions on gold
that it will ultimately receive as payment for opium.)

Red China not only receives gold across the Yunnan province
border in the Golden Triangle in return for opium going out, but
indirectly intervenes among the competing opium warlord
factions in Burma itself. During the early 1970s, the PRC armed
the so-called White Flag Communist Party under the command

134

DOPE, INC.

of Ping Chia-hsiang, supporting Ping's move to take over prime
opium-growing areas in the neighborhood of the Suloween
River. (27)

China is one primary factor in the opium growing regions;
Britain is the other. Most of the Burmese opium-growing regions
are subject to genial competition between the Maoist-controlled
White Flag Communist Party and other armed gangs, and Self-
Defense Forces under the control of British-trained and still
British-influenced Burmese security forces. Anglo-Chinese
cooperation on the Burmese border is one of the biggest scandals
in the area.

Forging the Hong Kong-Peking link

Until the Sino-Soviet split period, the ties that bound the
expatriate Chinese to the mainland were the strongest of all:
family. This link was expressed in the large-scale transmission of
remittances back to families on the mainland. According
to the limited available data, the largest volume of such remit¬
tances, for which special remittance transfer agencies had been
created, was to the small city of Swatow on the northern Chinese
coast; Swatow is the home city of the Ch'ao Chou Chinese. The
Ch'ao Chou, seafaring and commercial people with a special
dialect, evidently maintained the closest family links with the
mainland. That is the background to the wholesale recruitment of
expatriate Ch'ao Chou Chinese into Chinese secret intelligence
dining the postwar period. (28)

In the late 1950s, the volume of reported remittances dropped
off sharply. Instead of paying remittances directly to relatives,
expatriate Chinese invested heavily in both mainland China and
in foreign joint ventures with the Peking government. The flow of
remittances was capitalized in joint ventures with Peking, and
relatives back home received dividends from these investments.

The volume of remittances is given in the following table:

HOW THE DRUG EMPIRE WORKS

135

1950

39.0

1958

15.6

1951

29.1

1959

9.1

1952

19.2

1960

8.6

1953

29.2

1961

8.4

1954

30.2

1962

8.4

1955

30.1

1963

8.4

1956

30.2

1964

8.4

1957

27.4

(Based on published data for Thailand, Malaysia, and Singapore, projected
to include the rest of Southeast Asia.)

(Source: Andreyev, Overseas Chinese Bourgeoisie: A Peking Tool in
Southeast Asia.)

The point of decline of remittances (that is, legal remit¬

tances, as reported above) coincides with Peking's orientation to
joint investments with expatriate Chinese. That policy goes back
to 1951, when the South China Enterprise Company, the fore¬

runner of the present Overseas Chinese Investment Corporation,
sold 100,000 shares to Chinese businessmen in Hong Kong and

Macao. However, until 1957, the attractions for such investors
were limited; overseas Chinese investment could only find oppor¬

tunities in agriculture, the least profitable sector of the economy.

But in 1957 new regulations came into effect that not only guar¬
anteed a 12 percent dividend investment, against a normal 8
percent dividend in ordinary mixed companies. The Peking
government also made provision for repatriation of part of the
profits to the overseas Chinese investor.

By the mid-1950s, this capital was concentrated in the Overseas
Chinese Industrial Construction Company and related com¬
panies, which merged into the Overseas Chinese Investment

Corporation (OCIC) in 1955, with initial capitalization of $50
million. The board of directors of the OCIC included leading
Chinese businessmen resident in Southeast Asia. By 1966, there
were 140 businesses under the OCIC aegis operating in China. (29)

By the mid-1960s, however, the policy of using the hard cur¬
rency of expatriate Chinese to invest in China gave way to a

much more efficient form of raising vitally needed foreign
exchange. Peking took a stake in the expatriate Chinese com¬
munity's expanding operations in drug-pushing and dirty money

136

DOPE, INC.

operations, centering on the boomtown in Hong Kong. The result
is the flagrant cohabitation between London and Peking noted in
Section 4. (30)

THE $2.5 BILLION TAKE

Despite the overwhelming weight of evidence showing
Peking's integration into the Southeast Asian drug trade, there is
no way to "prove" that the $1.3 billion financial reflow into the
PRC during 1977 estimated by Chase Manhattan and the
projected $2.5 billion flow during 1978 represent the revenues of
the traffic. However, it can be demonstrated to the satisfaction of
the reader that this estimate is entirely consistent with all the
previous data.

By two independent types of estimate, our earlier data (Sec¬
tion 3) showed that the cash flow of the Far East drug trade broke
down as follows:

Primary wholesaling of opium and heroin $1 billion

(Golden Triangle plus secondary
PRC production)

Secondary wholesaling of opiates to $5 billion

West (20 percent cash reflow of
$25 billion world opium/heroin
market to Far East)

Retail opiates consumption in Far East $3-4 billion

Assuming that the PRC's primary wholesaling profits are $500
million, or half of the total — the lower range of apparently
accurate Soviet estimates — then the PRC's secondary whole¬
saling profits would be in the ratio of 5 to 1 with respect to the first
figure, or $2.5 billion. That is the Chase Manhattan figure
reported above. Since the PRC is undertaking major official
investments in Hong Kong this year, it is fair to assume that it
would repatriate illegal profits to be re-invested in legal enter¬
prises to a greater extent than during 1977, when the reflow back
to Peking was only $1.3 billion.

Of course, the above calculations are hypothetical, but they do
indicate that the $2.5 billion net revenue suggested by the Chase
Manhattan figure is well within the range of accuracy.

HOW THE DRUG EMPIRE WORKS

137

The same type of range can be obtained through an entirely
different chain of reasoning. The Soviet economist Andreyev,
using published sources of area governments, calculated that
total expatriate Chinese capital flow into China amounted to $1.66
billion in the years 1950-64 inclusive. Up through this period, the
primary financial relationship between the PRC and expatriate
Chinese was in the form of foreign investment inside China,
through such vehicles as the Overseas Chinese Investment
Corporation, as noted above. It is documented that after 1964,
PRC policy shifted into a high-gear "Opium War in Reverse"
posture, to use the phrase of British author Richard Deacon. At
this time, Chou En-lai made his infamous confession to Nasser.

As noted, the financial relationship shifted into joint ventures
in Southeast Asia between PRC-owned institutions and expa¬
triate Chinese, with a heavy concentration in narcotics traffic
and related activities.

Assume that the identical rate of expatriate Chinese financial
support continued during the years 1965-78 in this form of invest¬
ment, augmented only by a 10 percent inflation factor, highly
conservative for the area. The aggregate investment during 1965-
78 would amount to $6.3 billion, in joint operations with the PRC.
Assume a 40 percent annual profit margin on this investment,
much lower than profits on the drug trade, but in the middle of
the range of the 30-50 percent figure given above for smugglers'
profits in the area. The annual income from this investment
would be precisely $2.5 billion.

The big move into Hong Kong transformed Red China from a
mere producer of opium, into Britain's international partner in
the distribution, and later the financing, of the opium trade in the
Far East — if not elsewhere. (The Ch'ao Chou Chinese arrested
in a New York hotel room with a Philippine diplomat and seven
pounds of heroin carried the business card of the local New York
Ch'ao Chou fraternal association.)

America's disastrous involvement in Vietnam gave the Mao
regime the opportunity to make it big in the world of narcotics,
and Peking jumped in — and into Hong Kong — with both feet.
America paid the price of a skyrocketing rate of narcotics addic¬
tion. Nonetheless, the late 1960s were only a period of transition,

138

DOPE, INC.

the fulfillment of a strategic design sketched out between Mao
Tse-tung and the British old-line opium families in the early
1940s. That agreement, which united the highest level of British
intelligence and finance with the Peking leadership, we turn to in
the next section.

7

How the Royal Institute of
International Affairs Runs
Drugs and Dirty Money

Now we will take the reader up through the chain of command
of the world drug and dirty money business, to the top level of
political control: to Chatham House, St. James Square, London,
the headquarters of the Royal Institute of International Affairs.
We have inspected the books of Drugs, Incorporated, met the
operating personnel, visited its subsidiaries in Hong Kong,
Bangkok, and Peking, as well as its farms and factories in the
Golden Triangle, on the common border of Burma, Laos, Thai¬
land. and the People's Republic of China. The Far East drug traf¬
fic emerges as a single business operation, a British-Chinese
joint venture, in which Britain is the senior partner.

It is obvious, by now, that an operation of this scope could not
exist without the political approval of the British government,
nor without the gigantic supporting facilities of the world's off¬
shore credit markets, the world's gold and diamonds trade, and
"hands-on" management of the retail distribution, or organized
crime aspects of the operation.

The next step is an introduction to the Board of Directors of
Drugs, Incorporated, and an overview of their multifarious ties

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DOPE, INC.

to the Far East opium growing and wholesaling operation, the off¬
shore dirty money operations, gold and diamonds mining and
distribution, the Canadian connection, the Zionist Lobby dirty
money installations, and the top levels of British policy-making.

The Hongkong and Shanghai Bank is not an independent male¬
factor, but a special operation of the British oligarchy's top
banks, specializing in the Far Eastern drug traffic. The
Hongkong and Shanghai Bank's governing body, the London Com¬
mittee, is the British oligarchy's delegated group assigned to the
Far East drug traffic.

More specifically, it is an economic warfare operation. Two of
its directors, J.H. Keswick — of the family that founded Jardine
Matheson in 1828 to trade opium — and J.K. Swire — of the Swire
family of hereditary opium traders — were senior officials in Bri¬
tain's Ministry of Economic War during World War II. Another
senior official of that Ministry is Sir Mark Turner, the chairman
of Rio Tinto Zinc, the HongShang's partner in numerous fields,
including gold operations. Turner is now a key figure in the Royal
Institute of International Affairs, founded by Lord Milner, an

earlier chairman of Rio Tinto Zinc.

What we will show here is that the Royal Institute of Interna¬
tional Affairs (RIIA) and its leading personnel control not only
the Far Eastern drug traffic but every important dirty money
operation on the surface of the globe.

The next section will further document the British monarchy's

control of the Canadian banks and corporations, the same

installations responsible for channeling drugs into and illegal

funds out of the United States. It demonstrates that the direct
agency of control over Canada's huge financial warfare appara¬
tus is the Canadian Institute of International Affairs (CIIA), a
mock-up of Britain's RIIA, created by the RIIA in the first place.
Included in the Canadian operation are the Bank of Nova Scotia's
domination of Canada's gold market, Canadian banks' huge role
in Caribbean Silver Triangle dirty money operations, and — most
important — the direct links between the hard-core Far East
drug wholesalers, and the Canadian institutions that have parti¬
cipated in the wholesale drug traffic on the North American
continent since the closing days of Prohibition. Through the

HOW THE DRUG EMPIRE WORKS

141

Canadian outpost of the British monarchy, the drug traders close
the circle between the Keswick family of Hong Kong, the found¬
ers of Jardine Matheson in 1828, and the Bronfman family, the
immediate sponsors of the top levels of so-called organized crime
in the United States.

From their base in the $200 billion dirty money traffic, the insti¬
tutions assembled in force on the leading committees of the RIIA
dominate:

1) All of Britain's top commercial banks directly;

2) Both big British oil companies, British Petroleum and Royal
Dutch Shell directly;

3) All the leading British merchant banks, directly or

indirectly;

4) The world gold and diamonds trade;

5) Every leading old-line opium trading firm, including the
P&O Steamship Company, Jardine Matheson, John Swire and
Sons, and Charterhouse Japhet, directly.

GOAL: REBUILD THE EMPIRE

Now that the command structure of the worldwide operation is
evident, we are going to examine the content of the Royal
Institute of International Affairs' subversive activities, following
through the careers of some of its leading operatives — including
Sir John Henry Keswick, member of the family which controls
the Hongkong and Shanghai Bank, and from the old Jardine
Matheson opium trading firm; and the current chairman of the
Council of the RIIA, Lord Humphrey Trevelyan, member of the
board of directors of HongShang's gold-smuggling subsidiary,
the British Bank of the Middle East. These are the men who
created the Peking Connection in its modern form.

According to the Charter of the RIIA published in 1920, the
Royal Institute of International Affairs is "an unofficial and non¬
political body," whose object is "to advance the sciences of inter¬
national politics, economics, and jurisprudence," to "provide
and maintain means of information upon international ques¬
tions," and "to promote the study and investigation of such ques¬
tions." Few times in the history of the written word have so many
lies appeared in so few lines.

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DOPE, INC.

However, a concise summary of the RIIA's purposes appears
in its de facto founding document, Cecil Rhodes's 1877 bequest.
Rhodes, who founded both the gold and diamond mining empire
that still dominates world markets under the aegis of Anglo-
American and De Beers, and also founded the dope-trading-

Standard Bank (the African partner of the Asian-based Charter¬
ed Bank, since merged), is the starting point for the present form
of the disease. Rhodes left his wealth to the Rhodes Trust, ad¬
ministered by Lord Milner. Milner's collection of Ocxford train¬

ees, called the "Milner Kindergarten," made up most of the 1916
Lloyd George government, and formed the RIIA at a meeting in
Versailles on May 30,1919.

Rhodes's 1877 will was:

To establish a trust, to and for the establishment and
promotion and development of a secret society, the true

aim and object whereof shall be the extension of British
rule throughout the world, the perfecting of a system of

emigration from the United Kingdom and the colonization
by British subjects of all lands wherein the means of
livelihood are attainable by energy, labor, and enterprise,
and especially the occupation by British settlers of the en¬
tire continent of Africa, the Holy Land, the valley of the
Euphrates, the islands of Cyprus and Candia, the whole of
South America, the islands of the Pacific not heretofore
possessed by Great Britain, the whole of the Malay Archi¬
pelago, the seaboard of China and Japan, the ultimate
recovery of the United States of America as an integral
part of the British Empire, the consolidation of the whole
Empire, the inauguration of a system of colonial repre¬
sentation in the Imperial Parliament which may tend to
weld together the disjointed members of the Empire, and
finally, the foundation of so great a power as to hereafter
render wars impossible and promote the best interests of
humanity. (1) (emphasis added)

The secret society concept was passed on by Milner, Rhodes's
successor as High Commissioner in South Africa, through

HOW THE DRUG EMPIRE WORKS

143

Milner's trainees Lionel Curtis (of the Round Table Group), and
Lord Robert Cecil — whose family dates back to the Genoa-
Amsterdam coup against Elizabethan humanism in 1601. Curtis
and Cecil both participated in the May 1919 meeting at Versailles
which founded the RIIA.

The Royal Institute for International Affairs is the secret
society.

1949: The British-Peking deal

Let us backtrack, for a moment, to the point of origin of the Lon-
don-Peking joint drug-running venture in the Far East, the
wartime deal between the RIIA and Chou En-lai. Detailed
records of the relevant years have recently been made available.
In August 1978, the U.S. State Department released 1,300 pages of
documents to the public dealing with American diplomacy in
China at the time of the Maoist takeover. (2) From the British
side, the RIIA in 1977 released its own records of its wartime and
postwar operations group in the region, the Far East Committee
— the real British Foreign Office. (3)

Both sets of documents yield the same interpretation: the
creation of the People's Republic of China included an alliance
between the British dope-runners and the Chinese dope-runners.
This was negotiated from the British side by Sir John Henry Kes¬
wick and from the Chinese side by Chou En-lai. The Chinese team
also prominently included top figures in the opium trade, such as
the Bank of China's Chi Ch'ao-ting, Shanghai Commercial Bank's
K.P. Chen (who also headed the Chinese wing of the Institute for
Pacific Relations), and elements of the so-called Green Gangs.
The Green Gangs, which could be called the Chinese mafia, ran
the opium trade not only in the Far East but through the far-flung
networks of the Chinese expatriate community.

From both the British and the Chinese side, the alliance was
explicitly against the United States. The Chinese knew it, and
said so, the British knew it, and said so, and American diplomats
cabled home that the United States had been shafted. (4)

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DOPE, INC.

When the top representatives of Britain's RIIA began sound¬
ings in the Chinese Communist stronghold of Yenan and at Chou
En-lai’s Chungking legation during the World War II period, they
had reasons dating back a century to expect results. China lost
the opium wars because such a large section of officialdom had
been corrupted through opium dependency.

But the credit for the re-creation of the alliance between Brit¬
ain and the modern equivalent of the Triad gangs must go to Sir
John Henry Keswick, the RIIA’s man-on-the-spot at the British
Embassy in Chungking during the crucial period of World War II.
It is known that Keswick was in regular contact with Chou En-lai
in his capacity as a prominent businessman and through his at¬
tachment to the British embassy in Chungking. Chou was in
Chungking from 1937 through the 1940s. (5)

Keswick, of the hereditary drug-trading family that founded
and still controls Jardine Matheson, also represented the RIIA
and its sub-branch, the Institute for Pacific Relations, to the
United States. (6) Sir John Henry is still Britain's number one
man for China policy. Chairman of Britain's China Association,
Vice-President of the Sino-British Trade Council, and a member
of the Great Britain-China Committee. (His predecessor at the
China Association from 1951-55 was John Kidston Swire, of the old
opium-trading Swire family, who still sits on the London Com¬
mittee of the HongShang.)

Two pieces of eyewitness testimony from Mao Tse-tung's
wartime hideout in China's northern Yenan province bear
comparison. The first is the report by Peter Vladimirov, the
Soviet liaison to Mao's headquarters in Yenan during 1941-45.
According to the Soviet-published Vladimirov Diaries, the
Chinese Communist Party operating in Yenan grew opium for
profit, not only for medicinal uses. Opium had been a major cash
crop for Yenan before Mao's arrival; Vladimirov claimed that
Mao continued the practice. The Soviet representative also
suspected the CPC's chairman's close contact with American
visitors connected to the Institute for Pacific Relations. (7)

A second account appeared in the January 1978 issue of
International Affairs, the journal Of the RIIA:

HOW THE DRUG EMPIRE WORKS

145

Victor Farmer, who was a director of Imperial Chemical
Industries (China) and who in 1944 had recently returned
from a visit to the Far East (stated): "I have met some

(Chinese) Communists and their ideas are very open-
minded. If you could get rid of this ultra-nationalist clique
in the saddle at present in Chungking, and many Govern¬
ment officials are extremely broad-minded, I think that the
way would be open for a compromise with the Commun¬
ists; and an effective compromise." (8)

The view Farmer expressed on behalf of the RIIA's Far
Eastern Committee had already surfaced in the United States
through the committee's American branch, the Institute for
Pacific Relations (IPR), the institution that produced the pro-
Maoist group in the U.S. State Department centered around John
Stuart Service and John Carter Vincent. Although the IPR

included American citizens and was funded through the Rocke¬
feller and Carnegie Foundations, it functioned exclusively as a

branch of the RIIA and British policy-making. The IPR's two
most prominent general secretaries, Edward Carter and
William Holland, had extensive British pedigrees. Carter,

whose reign as IPR chief lasted until 1946, was a leader of the
international YMCA, while his successor Holland was a citizen of
New Zealand until 1943 and a member of London's Royal

Institute.

The dead giveaway on the IPR's British character is the

organization's move to Canada subsequent to the 1950 McCarran
Committee investigation, which mistook pro-British treason for
pro-Communist treason. With hearty British cheers, the dis¬

graced Institute for Pacific Relations moved to Canada.

Britain's support for the IPR was further expressed by the

chairman of the RIIA's Far Eastern Group, Sir Andrew

McFadyean (who in 1947 became the chairman of S.G.

Warburg's, the merchant bank). In a 1952 letter he wrote: "The

fact that I have criticized certain activities and certain officers of
the IPR entitles me to say with greater emphasis, firstly that it

would have been a useless body if it had not represented a wide

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DOPE, INC.

variety of political views, and secondly that throughout my
acquaintance with the Institute its governing body, while respect¬
ing the rights of free expression, has never encouraged or coun¬
tenanced subversive views." (9)

Once in Canada, the IPR came under the official sponsorship of
the Canadian Institute of International Affairs, the local RIIA
subsidiary, and its chairman — now "honorary Chairman for

Life" — Walter Lockhart Gordon. During the last 30 years, Gor¬
don has been the most consistent North American apologist for

Maoist China. Gordon currently has direct personal ties to

Canada's "old China hands," including Dr. Paul Lin, Chester
Ronning, and James Endicott. All three served as advisors to
Chinese Premier Chou En-lai; Paul Lin's official duties as an
aide to Chou terminated only in 1965. Lin, in turn, is a power in the
expatriate Chinese community in Vancouver, the most important
transshipment point for opium entering the United States.

The ties run back the other way across the Pacific as well. Gor¬
don sponsored the initial founding of the Chinese People's Insti¬

tute of Foreign Affairs in China, an official Red Chinese organiza¬
tion that currently maintains links with the Canadian Institute
of International Affairs. Chester Ronning has been the Chan¬

cellor of the University of York in Canada; Walter Lockhart Gor¬
don arranged funding for the Norman Bethune School at that uni¬
versity under Ronning’s supervision, the most overtly pro-Maoist
institution on the North American continent. That is the pedigree
of the British-created, British-defended, and still British-run

Institute for Pacific Relations. (10)

SQUEEZE PLAY

According to the RIIA’s official account cited above, the RIIA-

IPR’s function at the close of World War II was to propose the
John Service-John Keswick policy of fostering Maoism as
the "alternative" to Britain's shrill insistence on her colonial
rights in the area. Prime Minister Churchill still balked at the
self-determination provisions of the Atlantic Charter, namely
that Britain give up its Southeast Asian colonies. Anti-Brit¬
ish feeling ran so high in the United States, the International

Affairs study points out, that Henry Luce's Life magazine

HOW THE DRUG EMPIRE WORKS

147

urged the British people "to stop fighting for the British Empire
and fight for victory ... if you cling to the Empire at the expense
of a United Nations victory you will lose the war because you will
lose us." A poll taken in 1942 revealed that 56 percent of Ameri¬
cans questioned agreed that the British could rightly be
described as "oppressors . . . because of the unfair advantage
. . . they have taken of their colonial possessions."

The RIIA and the IPR's "alternative" posture was a retreat
under fire from an imperial position in the Far East to an alliance
with the Great Han chauvinists of the Communist Party of China.
Any suggestion that an actual policy difference intervened
between the "hidebound reactionary" Winston Churchill and the
openly pro-Maoist Victor Farmer of the RIIA's Far Eastern
Group, is made silly by the role of Jardine Matheson's John
Henry Keswick.

Keswick was a prominent figure in the Shanghai International
Settlements, of which his brother. Sir William Johnston Keswick,
was chairman throughout the 1930s and until 1949. Britain had
owned a chunk of the city of Shanghai by the treaty that ended the
Second Opium War. The status of the Shanghai International
Settlement was one of the major policy conflicts between Roose¬
velt and Churchill, since it represented a foreign colonial intru¬
sion in an allied nation. Britain's concern for Shanghai may also
have been motivated by the fact that it was the world's center for
refining opium into heroin. Keswick and the refineries both
picked up and moved to Hong Kong in 1949.

In January 1945, pro-Maoist Victor Farmer and John Henry
Keswick (with Andrew McFadyean) together led Britain's dele¬
gation to the Institute for Pacific Relations's most important con¬
ference at Hot Springs, W. Va. Ten British officials went along in
tow with the RIIA officials. The British delegation presented a
softer front to the Americans than the Churchill government was
then willing to officially concede. RIIA documents show that the
queer combination of Chinese Communist Party apologist Victor
Farmer and old-line opium trader John Keswick did the trick of
mollifying the Americans.

"The general atmosphere here (at Hot Springs — ed.) is very
much better than (at the last Institute for Pacific Relations con-

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DOPE, INC.

ference at) Mont Tremblant. . . . There is much less disposition

to twist British tails just for the fun of seeing how the animal
reacts," McFadyean wrote back to the RIIA in relief. (11)
American delegates included Treasury official Harry Dexter

White, responsible for selling to the United States John Maynard
Keynes's British blueprint for the International Monetary Fund.

Not until Mao's army marched into Shanghai in 1949 did the
Americans realize what they were in for. The new mayor of

Shanghai, Chen Yi, summoned John Keswick for secret talks, the
State Department documents reveal, virtually as soon as the
mayor arrived in the city. After a lengthy round of talks, Keswick
departed and called on the American consul-general. The
stunned diplomat later telexed back to Washington that Keswick
"made a statement that he did not expect Americans to fare well
under the Communist regime, but did not indicate whether this

opinion was formed as a result of the conversation with the
mayor." Keswick was either threatening the United States or
relaying what the Chinese had told him, the consul-general
wrote. "He would hardly have invented this as a bluff to frighten
away American competitors," the American concluded
optimistically. (12)

How ingenuous that evaluation was became clear within days.
Behind the backs of the Americans, the British negotiated a deal
to keep Hong Kong under London's control, and opened up
confidential lines of communications between the mainland and
Hong Kong. In wires to Washington. American diplomats accused
the British of tearing up the standing Anglo-American agreement
that all decisions respecting the Communist government would
be made in close consultations. "The Communists are obviously
trying to play off the British against us and seem to have
succeeded somewhat," one American official wrote. (13)

The British added insult to injury by maintaining an official
pro-Maoist propaganda campaign, which began far before the
Communists took over. British officials gave awards to leading
members of the CCP, even while maintaining "official"
diplomatic relations with Chiang Kai-shek, and gave lavish
public receptions for dissident elements of the Kuomintang, such
as the widow of Sun Yat-sen, the Chinese nationalist leader who

HOW THE DRUG EMPIRE WORKS

149

died in 1925. (Sun's wife is currently an official of the PRC govern¬
ment.) Shortly before the Communist takeover, one journalist
wrote: "The British have a reputation for very smart diplomacy
in Asia. Part of this comes from their ability to spot key groups
and get on the right side of them. It is generally believed by
observers that the British now figure the intellectual left wing to
be one of the groups that will gain rather than lose strength in the
political changes of the next few years, and are preparing for this
eventuality." (14)

American intelligence dispatches from 1947 reprinted in the
State Department release wrote: "It is significant to note that
shortly after the Communist takeover of the key city of Shanghai,
the Maoists halted all anti-British propaganda." (15)

Creation of the Hong Kong drug nexus

Under the public cover of Anglo-Chinese mutual seduction, and
before the horrified eyes of American observers, the British and
Maoists created the financial infrastructure of what would
later underwrite the Far East narcotics traffic. Keswick's open¬
ing of channels between Peking and Hong Kong permitted a divi¬
sion of the Shanghai banking families between mainland China
and Hong Kong; this 1947 division founded the expatriate
Chinese connection between Peking and London. (Apparently,
other expatriate networks, like the Thai bankers who date
back to the 1930s, were consolidated in the same fashion, al¬
though the same degree of documentation from the period is not
yet available.)

The Senate investigation of the Institute for Pacific Relations
revealed indirectly the role of the Royal Institute of International
Affairs in the creation of the drug-financing networks. The
McCarran Committee made public some of the correspondence
of IPR General Secretary William Holland. Holland, before his
ascendance as IPR chief in 1946, took over the China stations of
the American Office of War Information, an organization closely
tied to the wartime predecessor of the Central Intelligence Agen¬
cy, the Office of Strategic Services. Holland was in frequent

150

DOPE, INC.

touch with the head of the RIIA in London, which as noted above,
had created Holland's 1PR in the first place.

In one of the letters available from the 1950-51 McCarran pro¬
ceedings, Holland informed the RIIA that a top Chinese Com¬
munist banking official "may turn out to be one of the best
friends we have." (16) The official in question, Chi Ch'ao-ting,
was a top officer in the Nationalist Bank of China, until the
Maoist victory. At that moment, he shifted allegiance to the PRC
Bank of China. Moreover, Chi's defection was preceded by that of
a whole faction within the Nationalist Bank, which chose to
"make a deal" with the Communists rather than flee to Taiwan.
This faction, according to the 1949 State Department papers,
made arrangements to communicate with Chinese IPR leader
and Shanghai banker K.P. Chen, who had left Shanghai for Hong
Kong, even after-the Communist takeover. (17)

It should be added that, as a matter of public record, most of

the Nationalist Bank of China's cash flow during the period of

Chi's service came from the opium traffic, which the Chiang
Kai-shek government continued throughout the war years. Chi's
shift of allegiance was merely the poppy stem's bending with the
wind of change.

Chi's defection to Mao's Bank of China began an illustrious

career, during which he rose to a high position in the bank and

participated in international conferences for the PRC as well. As
noted, the Bank of China's financial connections to the West are
through Hong Kong, its reserves were and still are held with the
Hongkong and Shanghai Bank and the Standard and Chartered
Bank, its remittances payments conducted through the same
banks, and so forth. Chi's move — under the approving eyes of
Holland — only typified what went on in the Shanghai banking
community at large. In the same dispatch to the RIIA cited
above, Holland reported on his contacts with leading Shanghai
bankers, citing the case of Chinese Shanghai Commercial Bank
chief K.P. Chen. Chen fled to Hong Kong shortly before the Com¬
munists took over, Holland reported, adding, "Impossible as it
now seems, I have an idea Chen will later go to Shanghai." (18)

An entire section of the Shanghai bankers resisted pressure by
the departing Nationalist forces to transplant their operations to

HOW THE DRUG EMPIRE WORKS

151

Taiwan. As in the case cited by Holland, they preferred to hedge
their bets between the British and the People's Republic of China.
At the lower levels of the narcotics traffic, the notorious Green
Gangs, the footsoldiers of the traffic, broke en masse with the
Kuomintang forces, and moved into the Communist camp.
Neatly and speedily, the entire postwar opium apparatus had
been redeployed between Shanghai and Hong Kong.

One of Holland's close associates during the period was the
Canadian representative in Chungking, Chester Ronning — still
prominent in the Canadian connection to the London-Peking drug
apparatus. Utterly enamored of the Maoists, Ronning met

almost weekly with Chou En-lai's chief deputy, Wang Ping-nan,
during his 1945-47 tour of duty. (19)

Ronning's relationship with Wang Ping-nan has a special im¬
portance, which we will indicate momentarily. Ronning went on
to act as midwife in the Institute for Pacific Relations's 1950 re¬
birth in Canada after the scandal.

Both the State Department and the RIIA releases make fools of
those Americans who thought that the Institute for Pacific

Relations had "betrayed" American ally Chiang Kai-shek to the
red menace. The Kuomintang, a gang that couldn't shoot

straight, was merely losing the battle for Far Eastern opium.
(There has been substantial documentation, not immediately
relevant to the present chain of evidence, that remnants of the

Kuomintang army in Burma continued to grow opium for a

quarter-century after the Communist victory, and that some of
their friends in the China Lobby, e.g. AirAmerica, transported it
for them.) In fact, the United States was sold down the Pearl

River by our British "allies," in combination with the snickering
Chinese. America's youth paid the terrible price of this
deception.

At the outset of the Korean War, the public amity between
Great Britain and China was reduced — for purposes of public

consumption. However, the leading individuals who created the
Peking Connection continued to hold all the important strings,
and maintained the full continuity of the narcotics traffic.
Despite the public hostilities, the PRC operated freely on Hong

Kong's illicit gold exchanges, and present-day luminaries like

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DOPE, INC.

Stanley Ho (see Section 5) made their fortunes smuggling
strategic goods into China from Hong Kong.

THE EMERGENCE OF THE "CHINA CARD"

In 1951, Lord Humphrey Trevelyan took his post as British
Ambassador to China, the same man who today sits on the board
of the British Bank of the Middle East. Public contacts between
Lord Trevelyan and the Peking regime were necessarily low-key,
by the dictates of what even the British and Chinese consider
public decency. To cover their tracks the British claim that
Trevelyan did not meet Premier Chou En-lai during the first two
years of his stay in Peking, although they do admit that Trevel¬
yan's fellow diplomat John Henry Keswick had had regular
access to Chou during the early 1940s in Chungking.

However, Trevelyan's stay in Peking was not without great
importance. Trevelyan set up the beginnings of the so-called
American opening to China, laying the basis for the "China

Card." His partner in this maneuver was Chester Ronning's old

Maoist contact, Wang Ping-nan. By this time, Chou En-lai's old
deputy of the Chungking days was the PRC's Ambassador to

Poland. Trevelyan set up the first American diplomatic contacts
with the People's Republic of China — through China's Embassy
in Poland — during the mid-1950s. America's contact man with
the Peking government was Ambassador Wang Ping-nan.

Trevelyan's further career is remarkable. After a brief stay in
West Germany, he went on to become Britain's Ambassador to
Egypt during the Suez Crisis — the British-French-Israeli inva¬
sion of Egypt that wrecked President Eisenhower's world
development plan, the Atoms for Peace program. After a tour at
the British Foreign Office, he was Britain's Ambassador to the
Soviet Union during 1962-65, during the British-inspired Cuban
missile crisis. Currently, he sits on the board of directors of

British Petroleum, along with John Keswick's brother Sir
William Johnston Keswick, and various other members of the
boards of the HongShang and the RIIA council.

Lord Trevelyan completed the circle by taking the chair¬
manship of the Council of the RIIA, while keeping an active hand

HOW THE DRUG EMPIRE WORKS

153

in the opium business, through the British Bank of the Middle
East.

Direct experience in the drug trade is apparently a standard
qualification for chairmen of the Council of the RIIA. When
Trevelyan, Keswick, Holland, and Ronning were young men
setting up the Peking Connection during World War II, the chair¬
man of the RIIA Council was Waldorf Astor. Astor's great-grand¬
father, John Jacob Astor, was a British agent-of-influence in the
first years of the American republic; according to his
biographer, J. J. Astor was the first American to get in on the
drug trade alongside the British East India Company, starting in
1816 .

Figure 6

London's Royal Institute for International Affairs—

Drugs and Dirty Money

The RIIA is not composed of the most influential people in Great Britain -
the inner circle of the British monarchy and the orders of nobility — but
rather brings together the chief operating officers of the British monarchy's
policies in various fields. Its leading members include the following:
Lord Humphrey Trevelyan: Son of the British historian George Trevelyan;
Chairman of the Council of the RIIA; Chairman of the Trustees of the British
Museum; Chairman of the Committee for the Tutankhamen Exhibit; Eco¬
nomic and Financial Advisor, United Kingdom High Commission for West
Germany, 1951-53; Ambassador to Egypt, 1955-56; Undersecretary at the
United Nations, 1958; Ambassador to Iraq, 1958-61; Deputy Undersecretary
of State of the Foreign Office, 1962; Ambassador to the Soviet Union, 1962-65;
High Commissioner in South Arabia, 1967. Director: British Petroleum Co.,
1968-75; British Bank of the Middle East (100 percent owned by Hongkong
and Shanghai Bank); General Electric Company Ltd., 1965-75; President,
Council of Foreign Bondholders.

Sir (Roland) Mark (Cunliffe) Turner: Council RIIA, 1949-50; Chairman Rio

Bank Leumi
Anglo A-nerican

Tinto Zinc; Deputy Chairman of the merchant bank Kleinwort Benson Ltd.;
Chairman, Bank of America International Ltd. (London), 1971-; Director,
National Cash Register; Toronto Dominion Bank; Midland and Inter¬
national Banks Ltd.; formerly with Samuel Montagu and Co.; Ministry of
Economic Warfare, 1939-44; Undersecretary, Control Office for Germany
and Austria, 1945-57.

Sir Frank Roberts: Member of RIIA Council; Advisory Director Unilever;
Advisor on International Affairs to Lloyds; British Embassy in Paris, 1932-
35; Cairo. 1935-37; Charge d'Affaires to Czech Government, 1943; Deputy
High Commissioner to India, 1949-51; Ambassador to Yugoslavia, 1954-57;
Representative to North Atlantic Council, 1957-60; Ambassador to the Soviet
Union, 1960-62 (preceding RIIA Chairman Lord Humphrey Trevelyan);
Ambassador to West Germany, 1963-68; Vice-President, German Chamber
of Commerce in the United Kingdom, 1974-.

Sir Richard Powell: Member of RIIA Council; Deputy Chairman, Perma¬
nent Committee on Invisible Exports, 1968-; Deputy Secretary Ministry of
Defense, 1950-56; Permanent Secretary, Board of Trade. 1960-68; President,
Institute for Fiscal Studies.

Carmichael C.P. Pocock: Member of Council, RIIA; Managing Director,
Royal Dutch Shell, 1970-; joined Shell in 1946,

Sir Arthur Knight Member, RIIA Council; Chairman of Courtauld's since
1975; Director, Rolls Royce, 1971-; Member, Finance Committee of RIIA,
1971-; Court of Governors, London School of Economics, 1971-.
Andrew Knight: Member, RIIA Council; Editor of the London Economist,
1974-; J. Henry Schroeder and Wagg Co., 1962-; Investors Chronicle, 1964.
Ronald Grierson: Economist staffwriter, 1947-8; S.G. Warburg, 1948-58,
executive director 1958-69; Chairman Orion Bank, 1971-75; Director, General
Electric Ltd; member Trilateral Commission.

William Malpas Clarke: RIIA Council; Director, Committee on Invisible Ex¬
ports since 1966; Director, Grindlays Bank Ltd.; Euromoney Publications;
Brandt's Ltd.; The London Times, 1962-66.

Baron Shawcross: Member, RIIA Council; Director, Shell Transport and
Trading Co., 1961-72; Morgan et Cie., International, 1966-; Times News¬
papers Ltd., 1967-74; Hawker Siddeley Group Ltd., 1968-; Chairman, Inter¬
national Advisory Council, Morgan Guaranty Trust Co. of New York until
1978.

% percent ownership

B.A.C. Sweet Escott: Finance Committee, RIIA; Group Finance Co-ordina-
tor, BP Co. Ftd., 1962-; Economic and Overseas Committees, Confederation
of British Industries; Kleinwort Committee on Invisible Exports.
J.R. Robinson: Finance Committee, RIIA; director. Eagle Star Insurance;
former director. National Westminster; Finance Director, Rio Tinto Zinc.
J.P.G. Wathen: Finance Committee, RIIA; General Manager, Barclays
Bank Dominion, Colonial and Overseas; former manager, Lloyds Bank Ltd.
Again, Chart 2 shows that the leading members of the London Committee
of the Hongkong and Shanghai Bank have extremely close ties to the core
RIIA group. The chart also shows that these links continuously intersect two
major groups whose activities are key to drug wholesaling and large-scale
laundering of dirty money. The first is the old-line British opium traders,
including the Peninsular and Oriental Steamship Lines, Jardine Matheson,
John Swire and Sons, and Charterhouse Japhet. The second is the tightly knit
complex of world gold and diamonds production and sales.

Lord Catto of Cairncatto is the chairman of the board of the prominent mer¬
chant bank Morgan Grenfell & Co., which has close ties of ownership to Mor¬
gan et Cie. International, one of Lord Shawcross's companies.
Philip de Zulueta, the private parliamentary secretary to Harold MacMillan
when the latter was Prime Minister, advisor to every Tory Prime Minister
since the war, spent most of his career with the leading British merchant
bank Hill Samuel, also the largest merchant bank in South Africa; he is thus
in close association with Sir Mark Turner, Rio Tinto Zinc's Chairman, and a
director of Midland, and International Banks, Samuel Montagu (owned by
the same families as Hill Samuel), and various gold and other mining
ventures in which Zulueta has interests.

Henry Neville Lindley Keswick, of the family that controls Jardine Mathe-
son, now occupies the traditional Jardine Matheson seat on the London
Committee of the HongShang, a tradition that goes back to 1864. His father.
Sir William Johnston Keswick, is also a director of British Petroleum, along
with Lord Trevelyan, Chairman of RIIA, and B.A.C. Sweet-Escott of the
RIIA Finance Committee. The elder Keswick is also the representative of
drug wholesaling operations in the Far East with respect to drug retailing
operations in Canada: he is a director of the Hudson Bay Company (see
Section 8). H.N.L. Keswick's uncle David Johnston Keswick has been with

RI1A Bankeri

• RIIA Council
Member

British HoQuden

5 London Gold Pool
Banks, leading gold
and diamond mines,
dirty money traffic

Old Line Opium
Trading Companies

Ilong Kong &
Shanghai London
Committee

‘Central Bank'
of Opium Trade

Samuel Montagu, a core RIIA bank, since 1930, as well as with the family
firms. Another uncle. Sir John Henry Keswick, is the top man for British cor¬
porate policy towards China. He is Chairman of the China Association, Vice-
President of the Sino-British Trade Council, and a member of the Great Bri-
tain-China Committee.

John Kidston Swire, the Swire family's representative on the HongShang
board, goes back to World War II with RIIA Council Member Sir Mark
Turner and various other leading lights of the RIIA, when they all worked on
the Ministry of Economic Warfare. Sir John Henry Keswick is another
Ministry of Economics War veteran.

J.A.F. Binny and R.J. Dent are both directors of the National Westminster
Bank, one of the core RIIA institutions.

Sir Michael Turner, who retired as Chairman of the Hongkong and Shanghai
Bank in 1952 but remains on the London Committee, is still a director of
National Westminster Bank.

_8

Canada:

North America's
Hong Kong

Most heroin entering North America comes through Canada.
This is the estimate of authoritative law enforcement sources —
despite the misleading publicity about Mexican supply routes,
which are in any case mostly transshipment channels for Far
Eastern dope.

Virtually everything the reader now knows about the British
Crown Colony of Hong Kong applies to the British Dominion north
of the American border. The idea that Canada is a nation — in the
sense that Americans understand the term — is the product of
low-grade, if persistent, public relations efforts. Politically and
financially, Canada is run straight from the top by the British
monarchy, starting with the Governor-General whom the Queen
appoints, the Privy Council, and including the core group of
Knights of St. John of Jerusalem who control the bulk of Cana¬
dian business.

Canada's role in the drug flow to the U.S. is not much different
from its role during Prohibition — as we will document in Part III
of this report. Canada transships most of the heroin entering the
American market, because it was created and maintained as a

160

HOW THE DRUG EMPIRE WORKS

161

British Dominion on the northern flank of the United States to
carry out precisely such operations.

Despite the British monarchy's iron grip over the highest levels
of Canadian public life, there are a few individuals well placed in
Canada, including in its law enforcement services, who look to
America rather than Britain as a model for Canada's future. At
great risk to themselves, they have fought a long rearguard
action against criminal activities that enjoy near official sanc¬
tion. The American public has heard little of their efforts because
of Canada's Official Secrets Act, modeled on Great Britain's own
1911 Official Secrets Act. That legislation prevents any publica-'
tion or public discussion of what the government — that is, the
British-appointed Governor-General — chooses to regard as a
state secret. Given Canada's make-up, most drug-running, dirty
money laundering, and organized crime activity, including polit¬
ical terrorism, fall into that category. Anyone who writes about
this in Canada will go to jail immediately and could, under the
law, be executed. But without the help of Canadian citizens with
access to official sources, willing to take the risk, this report
could not have been written.

Three crucial cases

Before examining the structure of Canada's drug and dirty
money operations, a few leading examples will suffice to indicate
the nature of the problem. One is the personage of Walter Lock¬
hart Gordon, Honorary Chairman for Life of the Canadian Insti¬
tute of International Affairs (CIIA), the Canadian offshoot of the
British Royal Institute of International Affairs. The. CIIA re¬
ceives most of its funding directly from the office of the Govern¬
or-General. Every Canadian Secretary of State for External
Affairs since the CIIA's founding has been a CIIA member. The
CIIA is also the official sponsor of the Institute for Pacific Rela¬
tions, the nexus of Britain's Peking Connection (Sections 6 and 7),
after public scandal forced the Institute for Pacific Relations to
leave the United States after 1947.

162

DOPE, INC.

1. WALTER LOCKHART GORDON
Walter Lockhart Gordon's fingerprints show up throughout this
section. Apart from his lifetime post at the top of the CIIA, he is a
past chairman of the Privy Council, the Governor-General's
select operations group for running Canadian politics (1967-68);
he was finance minister from 1963 to 1965; and is a director of
some of the dirtiest corporate operations in Canada.

But most important, he founded Clarkson and Gordon, the
accountants firm that audits three of the five Canadian chartered
banks: Bank of Nova Scotia (of which Gordon is a director),
Toronto Dominion Bank, and Canadian Imperial Bank. Gordon's
partner, Stephen Clarkson, is also a leading member of the Cana¬
dian Institute of International Affairs, as well as a leading spon¬
sor of the Institute for Pacific Relations. Through a network of
accountants dispersed through these banks, Clarkson and
Gordon functions as a command center for the most extensive
dirty money laundering operation in the world, stretching from
the heroin receiving points in the Pacific Northwest, to the
branch operations of the Canadian banks in the Caribbean Silver
Triangle.

Gordon, as we shall detail below, is also Canada's chief con-
tact-man for the Peking Connection (see Section 7).

2. THE EAGLE STAR INSURANCE COMPANY
A second example is the group of British "spooks" who run the
Eagle Star Insurance Company, which heads the accompanying
chart of the Canadian drug networks. Eagle Star is one of Brit¬
ain's largest financial corporations, and a joint operation be¬
tween Britain's top financial firms, including Barclays Bank,
Lloyds, Hill Samuel, and N.M. Rothschild & Sons.

Eagle Star, as the chart shows, runs the Bronfman family
operation from the top, through its control of English Properties,
and English Properties' control of the "Bronfman" Trizec
Corporations.

The Bronfmans are what is known in intelligence jargon as
"cutouts," or controlled front-men. What is significant here is
Eagle Star's special qualifications for controlling the Bronfman
family's corporate group, which, in turn, has been the seat of

HOW THE DRUG EMPIRE WORKS

163

Canada's ram- and dope-running, dirty money, and terrorist

operations since Prohibition.

Eagle Star's management is British intelligence, by an ar¬

rangement that traces back to World War II.

Two Eagle Star directors. Sir Kenneth Strong and Sir Kenneth

Keith, were Number One and Number Two men, respectively, in
British intelligence immediately after World War II — when the
Bronfman family created its "legitimate" front Trizec with
Eagle Star funding. (1) Both men have kept up their close ties to
Britain's foreign intelligence service, MI6. Part III of this report

tells the story of the Bronfman family's dope-running, organized
crime, and terrorist activities. What is crucial to keep in mind

here is that the men who own the Bronfmans sit in the highest

councils of British covert operations.

In a pattern that has already become familiar. Sir Kenneth
Keith moves between the secret world of British intelligence and
the opium politics of the Far East. Keith is also a leading mem¬
ber of the Canadian Institute of International Affairs. Among

other leading corporate positions, including a directorship at
Canada's Bank of Nova Scotia, he is the chairman of the Hill Sam¬
uel group of companies, one of the leading British merchant

banks, and an incarnation of the old Samuel banking family's
interests.

Sitting with Sir Kenneth Keith on the board of directors of Hill
Samuel is the Hongkong and Shanghai Bank's Sir Philip de
Zulueta, member of the HongShang's controlling "London Com¬
mittee." Zulueta was private parliamentary secretary to a string
of British Conservative prime ministers while Sir Kenneth Strong
was completing his career at British intelligence.

Eagle Star is a sterling example of Canada's role in drags be¬
cause it contains every element of the drug machine: the Bronf¬
man family, which has spokes tying into the Zionist dirty money
and terrorist apparat; the top levels of British intelligence; and
the core of the opium trade, the HongShang itself.

3. THE HUDSON’S BAY COMPANY
The Hudson's Bay Company is the appropriate starting point for
a look inside the operations of Canada's drag machine. During

164

DOPE, INC.

Prohibition, it was the Bronfman's Seagram's partner in the
"Pure Drug Company," the main source of bootleg liquor during
Canada's dry period.

The Hudson's Bay is also a front for the grand old families of the
opium trade, the Inchcape and Keswick families, the proprietors,
respectively, of the Peninsular and Orient Steamship Company,
the world's (and the Far East's) largest shipping fleets, and Jar-
dine Matheson, Hong Kong's dominant trading company. The 2nd
Earl of Inchcape, whose son still runs the P&O lines, wrote the
notorious 1923 Inchcape report advocating the continuation of
opium production in the Far East to maintain British revenues.
The number two man today at the P&O, Vice-Chairman of the
board Eric Drake, sits on the board of Hudson's Bay.

Jardine Matheson's Sir William Johnston Keswick — the chair¬
man of the Shanghai Municipal Settlements during the 1930s peak
of Shanghai heroin traffic — only recently retired as a director of
the Hudson's Bay Company.

William Johnston Keswick and Sir Eric Drake also sit together
on the board of British Petroleum, next to Lord Humphrey Trevel¬
yan, the chairman of the council of the Royal Institute of Inter¬
national Affairs and Britain's charge d'affaires in Peking during
the critical years 1951-53.

Drake is also a director of the top British merchant bank Klein-
wort Benson. As noted in Section 7, Kleinwort Benson's wholly-
owned subsidiary Sharps Pixley Ward jointly runs the Hong Kong
gold market with the Hongkong and Shanghai Bank, a crucial
support operation for the Far East drug traffic. Drake's fellow
director, the deputy chairman of Kleinwort Benson, is Sir Mark
Turner, of Rio Tinto Zinc. Rio Tinto Zinc, in turn, was founded by
Matheson family money in the 1840s, and Mathesons ran Rio
Tinto Zinc until the turn of the century. To complete the circle,
William Johnston Keswick sits on the board of Jardine Matheson,
along with several directors of Sir Eric Drake's P&O Steamship
Company.

In other words, the Hudson's Bay Company, the most "Cana¬
dian" of companies, is run from the top by a combination of Far
Eastern old-line drug traffickers and their closest London
contacts.

HOW THE DRUG EMPIRE WORKS

165

The Hong Kong opium connection goes even further. Sir Wil¬
liam Keswick's son, Henry Neville Lindley Keswick, a board
member of the Hongkong and Shanghai Bank, is also a director of
MacMillan Bloedel, one of Canada's biggest pulp and paper
operations, closely tied to the Macmillan publishing interests.
The Macmillans took off as a Canadian family when Harold Mac¬
millan—later British prime minister at the time of the Kennedy
Administration — married the daughter of Canada's Governor-
General, the Queen's personal representative. The Governor-
General in question was the 9th Duke of Devonshire, Victor C.W.
Cavendish, who held office 1916-20 at the outset of Prohibition; his
son-in-law Harold Macmillan became his chief assistant in
Canada in 1919, the same year that Arnold Rothstein set up the
big liquor delivery contacts in England. The Governor-General's
son William helped Joe Kennedy make-contacts among big Eng¬
lish distilleries. The MacMillan interests started with Prohibi¬
tion. Today, through their association with William Johnston
Keswick — who personally ran the Shanghai heroin traffic during
the 1930s — they are up to their necks in the drug trade.

Canadian Pacific Ltd., the biggest company in Canada, holds a
controlling interest in MacMillan Bloedel.

Dope goes in, dirty money goes out

According to high-level Canadian intelligence sources, most of
the heroin that reaches North America is flown in through Cana¬
dian Pacific Air. There is no "smoking gun" evidence to substan¬
tiate this, but a November 1978 trial in Vancouver reveals evi¬
dence that Canadian Pacific was involved in the smuggling of 22
pounds of cocaine from Hong Kong.

Figure 7 neatly traces the flow of heroin and dirty money in
Canada: the drugs come in through Canadian Pacific and then
are conduited to points south of the border. Heavily interlocked
with the Western Canada connection is the Bronfman group,
whose corporate center is Seagram, and whose financial center is
the Trizec group. Since Prohibition, Seagram has handled the
flow of smuggling into the United States (see Part III).

166

DOPE, INC.

Both Seagram (and its old Prohibition rum-running partner,
Hudson's Bay) are interlocked through a maze of contacts with all
five of the big Canadian chartered banks: the Bank of Montreal,
the Royal Bank of Canada, the Bank of Nova Scotia, the Toronto
Dominion Bank, and the Canada Imperial Bank. Thus the dirty
money gleaned from the drug trade is conduited through these
banks to points further south: the banks' offshore centers in the
Caribbean and from there the money makes its whirlpool round
of worldwide laundering.

Canada's Big Five dominate all Canadian banking as fiercely
as the British Big Four — Barclays, National Westminster,
Lloyds, and Midlands — do in Britain. Unlike the United States,
which has a relatively broadly spread base of regional banking,
Canadian and British banking is run from the top by the institu¬
tions named. The Canadian institutions are barely distinguish¬
able in their current practice from the British buccaneers who
plied the Caribbean during the 17th century. Along with the Brit¬
ish banks, which have numerous joint ventures with the Cana¬
dians — e.g., the Royal Bank operates in the Bahamas under the
"RoyWest" cover in a joint venture with National Westminster —
they are the core of the dirty money operations offshore of the
United States.

The Royal Bank of Canada has 21 affiliates in offshore banking
and subsidiaries — more than any other bank in the world save
Barclays Bank. Royal Bank's "RoyWest" connection to the
National Westminster Bank ties it closely to the Hongkong and
Shanghai bank itself; HongShang has two mutual directors with
National Westminster, J.A.F. Binny and R.D. Dent. Dent is the
descendant of the old-line British opium trading family that
founded Lancelot Dent about the same time that Jardine
Matheson appeared.

Among other links, the Royal Bank of Canada is tied to the
Bronfmans through Neil Phillips — son of Lazarus Phillips, the
Bronfman family's lawyer and most trusted aide from Prohibi¬
tion until the 1950s.

CANADA'S SILVER TRIANGLE

Royal Bank has the dirtiest reputation of any bank in the Carib¬
bean. According to authoritative diplomatic sources, the Royal

HOW THE DRUG EMPIRE WORKS

167

Bank of Canada directly ordered the Guyanese government to
plant marijuana in order to raise foreign exchange income. In
1976, when Guyana went flat broke and applied to the Interna¬
tional Monetary Fund for emergency assistance. Royal Bank of
Canada officials met with senior members of the Guyana govern¬
ment. The Royal Bank insisted that Guyana transform its eco¬
nomy into a "cash crop" producer before it, or any other major
bank, would issue loans. The Guyanese were desperate and did
what they were told. Northwest Guyana, in consequence, has
become a major producer of marijuana for the North American
market.

Second in the Caribbean offshore centers to the Royal Bank is
the Bank of Nova Scotia — Walter Lockhart Gordon's bank. A top
Bronfman aide and figure in Canadian Zionist organizations,
R.D. Wolfe, sits both on the board of Seagram and the Bank of
Nova Scotia. Scotiabank has 13 branches in offshore centers, as
well as innumerable joint ventures and similar fronts.

Banking and diplomatic sources agree that the Bank of Nova
Scotia is the number one handler of flight capital out of Carib¬
bean countries, especially troubled countries such as Jamaica.
Apart from funds fleeing difficult political situations, much, if not
most, of all illegal money transfers out of the Caribbean. A large
portion of Jamaican illegal funds are conduited through a Jamai¬
can national currently employed in a senior position at the big
New York brokerage house Drexel Burnham Lambert. (2)

Scotiabank's Jamaican trade is a particularly filthy business,
since it involves shifting funds earned in Jamaica by local crimi¬
nals into safe havens. The cash side of the Jamaican operations,
according to law enforcement sources, is done more with arms
than drugs. Planes fly into Jamaica with loads of small arms,
and take loads of marijuana out. The retail side in Jamaica is
arms selling. The ultimate cash proceeds of the selling chain are
then laundered through Scotiabank.

The Bank of Nova Scotia's role in Canadian gold markets,
through its own trading operations and its interlock with the
chairmain of the second-largest Canadian gold trader, Noranda
Mines, was already noted in Section 4. According to informed
New York gold market sources, a substantial proportion of Nova

168

DOPE, INC.

Scotia's flight capital operations are accomplished through ille¬
gal purchases of gold by Jamaican and other nationals. The same
sources add that Dr. Henry Jarecki's Mocatta Metals in New

York (see Section 4 again) has a substantial share of Caribbean
dirty money traffic.

The Canada-Peking connection

The starting point of any examination of Canadian drug traffic
is Walter Lockhart Gordon's close relationship to Canadian
Pacific. Gordon is Canada's grand old man. Honorary Chairman
of the Canadian Institute of International Affairs for Life, top

leader of the ruling Liberal Party, finance minister after 1963,
and chief foreign policy-maker in Canada for the past 30 years.

Gordon sits on the board of directors of Canadian Pacific and
the Bank of Nova Scotia; his accounting firm, Clarkson and Gor¬
don, handles the accounts of the Bank of Nova Scotia, Toronto

Dominion Bank, and Canadian Imperial Bank.

THE GO BETWEEN

Authoritative Canadian intelligence sources further identify
Gordon as the controller of Canada's three leading China special¬
ists, Paul Lin, James Endicott, and Chester Ronning, whom we
met earlier in Section 7. The association goes back in the cases of
Endicott and Ronning to the end of World War II, when the two
returned from close collaboration with Chou En-lai, to become
the core of the transplanted Institute for Pacific Relations in
Canada.

Based in Montreal, Paul Lin is the go-between for Walter Gor¬
don and the Vancouver, British Columbia drug wholesaling and
transshipment operations. Lin's most important contact is the
former president of drug-shipping Canadian Pacific, John D. Gil¬
mer. Gilmer is a Knight of St. John of Jerusalem, and the patron
of People's Republic of China fronts on Canada's West Coast.
Paul Lin is his personal attorney.

In turn, Gilmer is the attorney for two open representatives of
the People's Republic of China in Vancouver, B.C., the Chinese
Commercial Corporation and the Chinese Cultural Center. The

HOW THE DRUG EMPIRE WORKS

169

Chinese Cultural Center in Vancouver receives funding from an¬
other Knight of St. John, John Robert Nicholson, a close associate
of Gilmer.

Both Gilmer and Nicholson are major funders of the Simon
Fraser University in Vancouver, which became the home of the
Institute for Pacific Relations after it was driven out of the
United States. Paul Lin's brother. Dr. Tsing Lin, is currently
employed at the Institute for Pacific Relations. All these men
have been working together since the Institute for Pacific Rela¬
tions, as detailed in Section 7, served as the Royal Institute of
International Affairs bridgehead into the United States, and
Chester Ronning was meeting weekly with Wang Ping-nan and
occasionally with Chou En-lai in Chungking.

Endicott, now an old man, created the leading North American
center of explicit Maoism, the Norman Bethune Institute at York
University. Walter Gordon was the university's chancellor for
many years. Gordon personally arranged the funding of the
Bethune Institute, named after a Canadian doctor who served in
Mao's armies.

Gordon's accounting firm Clarkson and Gordon tries to keep its
nose clean of overt involvement in the drug trade. But one of its
escapades caused a public scandal in Canada five years ago.
Clarkson and Gordon put together the funding for Rochdale
College in Toronto, an experimental university that quickly
became the most drug-ridden college campus in Canada. By the
early 1970s Rochdale College had become not only a main center
of illegal drugs consumption, but also the retail distribution point
for marijuana and hallucinogens throughout most of Eastern
Canada. When the story inevitably became headline material in
the early 1970s, Canadian police were compelled to shut it down,
as a matter of public decency. Clarkson and Gordon, who had
created Rochdale College, sadly took the drug-ridden remnant
back, acting as its receiver and liquidator.

Who rules Canada

But the company to which Gordon is closest is Canadian Paci¬
fic, which controls most of the dominion's air, sea, and land

Figure 7

Drug-Running—The Canadian Connection

FAR EAST
DRUG
TRAFFIC

(Vancouver)

CANADIAN

PACIFIC

J.C. Gilmer
‘ormer president

G.A

Hart Chm. Bank of Montreal

W.E

McLaughlin Chm. Roya' Bank

CHARI FSP BRONFMAN

Ian Sinclair Chm. Canadian Pacific

F S.

Burtrdge. Pres. Canadiar Pacific

Wil'iarr A. Arbuckle. V P Bank Montreal

MacMillan

H.N L. Kesw.ck* W.J KESWICK*

Blocdel

Prohibition Operations
rto U.S

J. Barhett Morgan

WALTFR LOCKHART GORDON* Chm CHA

F.c. Manning

J.h. Moore Chr- Bras<;an

*Far East Opium Runners

172

DOPE, INC.

transportation. It has directors in virtually every industry it does
not control. As the accompanying chart demonstrates, it is inter¬
locked three ways with Seagram Ltd., the core of the Bronfman
group. The chart only shows a handful of Canadian Pacific's links
to the five major chartered banks; no fewer than 14 of its direc¬
tors sit on their boards.

Most important, Canadian Pacific features no fewer than four
members of the Most Venerable Order of St. John of Jerusalem
on its board. They include the aforementioned J.C. Gilmer of Van¬
couver, the angel for every Maoist front in the city; W.E.
McLaughlin, the chairman of the board of the aforementioned
Royal Bank of Canada; and J.P.W. Ostiguy.

Only one other corporation in the world, Barclays Bank, con¬
tains more members of the British monarchy's most elite order
among its directors. That fact alone establishes Canadian Paci¬
fic's vassalhood before the feudal rights of the British monarchy.
In terms of Canada's real chain of command, it is an honor for
Charles R. Bronfman to sit on Canadian Pacific's board.

The concentration of Knights of Malta on the council of the
Canadian Pacific Company also clears up — from a professional
intelligence standpoint — why that company has special access
to the Far Eastern narcotics traffic. The chairman of the board of
the HongKong and Shanghai Bank from 1962 to 1970 was Sir
Michael Turner. When the current chairman, M.G. Sandberg,
replaced Turner in 1970, he remained on the "London Commit¬
tee" of the HongShang (as well as the board of directors of
National Westminster Bank, with two of his fellow HongShang
directors). Sandberg was created Commander of St. John, a
high-ranking position in the elite order, in 1960. He is still the
chairman of the Council of St. John — the organization of the
Knights — in Hong Kong. The company most under the direction
of the Knights of Malta in Canada deals directly with the chief of
their order in Hong Kong.

At the other end of the Canadian drug cycle, the dirty money
banks, each of the five Canadian dirty money banks has at least
one Knight of Malta on its board. The Canadian Imperial Bank
and the Bank of Nova Scotia are directed by three Knights of
Malta each.

HOW THE DRUG EMPIRE WORKS

173

In addition, there is no question that the Canadian Institute of
International Affairs — which has picked every Canadian foreign
minister of this century — is not a Canadian institution, but the
local branch of the British monarchy's most elite chivalric order.
Canada's former Governor-General, Roland Michener, and cur¬
rent chairman of the CIIA is also a Knight of St. lohn. A board
member of the Italian branch of the Order of St. John, the Order
of St. Lazarus, is a member of the CIIA's board, Henry R. Jack-
man. J.J. Jodrey, another board member, is also a Knight of St.
John.

The Order of St. John respects the same chain of command as
do Canada's Governor-General and Privy Council: the Queen of
England, who is the titular head of the Order, and the Queen's
cousin, the Duke of Gloucester, who is Grand Prior to the Order.
These men control the finances and logistics of Canada's eco¬
nomy. Through a series of "cutouts," like the Bronfman family,
they also control the drug-running, the organized crime, and the
political terrorism directed against the United States.

There has been little effective challenge to their rule of these
forces in Canada since 1910, when then-Prime Minister de
Laurier attempted to organize a counterweight from within the
British dominions, including support from then Prime Minis¬
ter of South Africa, Botha. Lord Milner, whom we profiled earlier
in Section 7, traveled to Canada in 1908 to avert what would have
been a catastrophe in the eyes of the British monarchy.

Milner's visit, which founded the Canadian Round Table Group
— the mother organization of Walter Lockhart Gordon's Cana¬
dian Institute of International Affairs — was ultimately success¬
ful. Robert Borden, a Milner protege, replaced de Laurier in 1910,
and Canada was secured for the Prohibition offensive against the
United States. Robert Borden's descendant Henry Borden still
sits on the Council of the Canadian Institute of International
Affairs.

The project is best summarized in a letter that Rudyard Kip¬
ling, the swastika-wielding racist who helped found Canada's
Institute of International Affairs, wrote to Lord Milner after the
de Laurier initiative failed:

"This busts the de Laurier-Botha liaison," Kipling wrote, "in

174

DOPE, INC.

what are called our Imperial Councils. Additionally, Australia
will be deprived of big sister's (i.e. Canada's — ed.) example as
an excuse for nibbling after American 'protection' on her behalf
. . . and I do believe it smashes French power for good. Seriously,
don't you think it's the best thing that's happened to us in ten
years? Also, we've worked very hard for it." (3)

_9

All in the Family:

The Real Syndicate

Why, if so much detailed evidence on the world narcotics

traffic exists in the public record or in the files of law enforce¬
ment agencies, has this picture remained hidden for so long? The
answer put forward at the outset was that the "Purloined Letter"
principle is in effect: the HongShang and other top traffickers

who mingle freely in the business world were designed speci¬
fically to hide the drug trade behind a facade of legitimate

finance. At bottom, that fraud may deceive the general public,
but it could not—by itself—hold professional investigators at bay
indefinitely. The more important answer lies deeper.

The answer takes the reader behind the corporate board rooms
and precious metal exchanges to the inner life of the British elite.
What we now present would be easier to explain in the format of
fiction than of fact: the entire world drug traffic has been run by
a single Family since its inception. That statement applies not
merely to growing and distribution, but to political, intelligence,

and ideological support as well. We will sketch out the animal in
this section and in the accompanying chart.

Popular accounts of the Italian organized crime families, or

175

176

DOPE, INC.

their counterparts in the Jewish and expatriate Chinese banking
groups, give the reader a starting point whence to look at Great
Britain's oligarchy. Britain's elite, in a superficial sense, runs
along lines not much different from the organized crime families.
The Keswick family of Jardine Matheson, the Inchcape family of
the Peninsular and Orient Steamship Co., the Russells, the Dukes
of Sutherland and Elgin, appear and reappear in this account,
from the first Opium War to the directors' lists of the most
prominent British banks. The same interbreeding dynasty
controls every major bank, mining, and transportation company
in London, including the HongShang, Jardine Matheson,
Barclays Bank, Anglo-American Corporation, N.M. Rothschild,
and Lazard Freres. As we will show, their cousins and in-laws

also control Britain's political and intelligence establishments,
and have done so throughout the entire time-frame of this
report.

After a more careful look, however, the "Mafia" image turns
out to be something like a pornographic negative: the Italian,

Jewish, Ch'ao Chou Chinese, and other ethnic minorities that
figure in aspects of the narcotics traffic are fitting allies of the
British oligarchy because their tight-knit family networks
parallel it. But the British dynasty is deeper, more sinister than

that. The dynasty enjoys such power in Britain that a favored
nephew can clear opium shipments through Hong Kong, while an
uncle clears payments through a big London bank, a second
cousin expedites necessary gold shipments through the Hong
Kong market, and an in-law in British intelligence reassures the
American drug enforcement authorities.

To call this a "conspiracy" would abuse the meaning of the
term. Under examination is a dynasty that has controlled Britain

for hundreds of years, enjoys virtually all major positions of
corporate and political power, and believes that making events
happen from behind the scenes is as natural and ordinary as
afternoon tea. When the chairmen of the boards of Britain's
leading banks, trading houses, and mining companies show up at
the same weddings and christenings (and bar mitzvahs) as the
chiefs of British intelligence and various government ministries,
there is no need for the formal trappings of conspiracy. Conspira-

HOW THE DRUG EMPIRE WORKS

177

torial rituals are useful to bind together secret societies
composed of otherwise unorganized individuals. But it doesn't
work that way at the top. In a frank discussion, a Lazard Freres
partner who is quite active in the Royal Institute of International
Affairs exclaimed. "You seem to think that a group of men meets
secretly in a room somewhere to hatch plots about this or that. I
can assure you that it doesn't work that way!"

The British gentleman is entirely within his rights. Like the
HongShang Bank itself, the British oligarchy is so much part of
the bedrock of events that it does not need to act in conspiratorial
fashion: by its own self-description, it merely is, and always has
been. Its adherents have indulged in public self-examination only
under the protective coloring of fiction, e.g. a famous novel by a
member of one of the British secret societies, Bram Stoker's
Dracula. Of that secret society, the "Order of the Golden Dawn,"
more will be said below.

THE FAMILY RELIGION

The sinister element that sets the British oligarchy apart from
the popular image of the Mafia family is its unshakable belief
that it alone is fit to rule the world—the view reflected in Cecil
Rhodes's 1877 Testament, cited in Section 7. Their religion is not
the Anglican Christianity they publicly profess, but a hodge¬
podge of paganism, including satanic cults such as Theosophy
and Rosicrucianism. The central, syncretic ideology of the
oligarchy's inner cult life is the revived Egyptian drug cult, the
myth of Isis and Osiris, the same anti-Christian cult that ran the
Roman Empire. And like the ancient Isis-worshipping Egyptian
dynasties, the British ruling family networks have maintained
power for centuries by keeping the secrets of their intrigues with¬
in the family.

The Isis cult also formed the core of Lord Palmerston's
Scottish Rite of Freemasonry. As Prime Minister during both
Opium Wars, Palmerston employed variants of this ideology to
spin a web of connections that stretched from the Order of Zion in
Romania to the Ku Klux Klan in the United States. Parts I and III
of this report document how Palmerston's Scottish Rite
engendered the subterranean world of drug-related mysticism.

178

DOPE, INC.

and its various secret societies, including what the public now
calls "Organized Crime." (1)

The Cult of Isis, dredged up in modern format, was the official
ideology of leading British politicians, financiers, and literary
figures during the previous century. Its great public exponent
was the colonial secretary during the Second Opium War,
Edward Bulwer-Lytton, the author of The Last Days of Pompeii,
which first popularized the Isis cult, and the mentor of Cecil
Rhodes's whole generation of British imperialists.

The Royal Institute of International Affairs was the "secret
society" called for in Rhodes's will and is the body that provides
the command structure for the drug trade. But the Royal Insti¬
tute itself was founded by an even more secret group: the "Circle
of Initiates . . . devoted to the extension of the British Empire,"
in the description of one of its historians. (2) The Circle of Ini¬
tiates included Lord Milner; Cecil Rhodes, the founder of
Britain's African mining empire; future prime minister Arthur
Balfour; Albert Grey; and Lord Rothschild.

All these men celebrated forms of the Isis cult. Their world¬
view was largely designed by Britain's leading exponent of the
Isis cult, novelist Edward Bulwer-Lytton, and his protege John
Ruskin. Britain's High Priest of Isis, Bulwer-Lytton, was also the
British government's chief drug-runner.

The words of American Founding Father Tom Paine to charac¬
terize British King George III, against whom America fought the
Revolutionary War, thus are highly appropriate: "I rejected the
hardened, sullen-tempered Pharaoh of England forever . . . and
disdain the wretch."(3)

The beginning: the Knights of
St. John of Jerusalem “

The elite of the elite in Britain's secret dynastic life is Her
Majesty's Most Venerable Order of St. John of Jerusalem — the
"Christians who are not really Christians." (4) We have already
highlighted the Knights' prominence in the centers of the world

HOW THE DRUG EMPIRE WORKS

179

drug traffic: from the Hongkong and Shanghai Bank to the
Canadian Pacific in Vancouver to Barclays Bank in London.
Although Queen Victoria reconstituted the Most Venerable Order
in the 1880s as the Protestant British branch of the Knights of
Malta, our tale properly begins much earlier with the original
order of the Knights of St. John, founded in Jerusalem in 1070.
The order of St. John inherited what British authors smirkingly
call "the wisdom of the East" from the Coptic. Gnostic, and
Manichean networks of the Eastern Mediterranean. The Order of
St. John thus maintained direct continuity with the ancient Cult
of Isis.

However distant from the familiarity of the American reader,
the area we have entered must be viewed the way the families
themselves see it. The brooding evil of Walter Scott or Robert
Louis Stevenson romances, or their cheap Gothic novel imita¬
tions, gives the reader a basis for insight into the inner history of
the families, and the need to begin with cobwebbed history in
order to get to the bottom of Dope, Incorporated.

To begin at the beginning: in the 14th century, the Order of St.
John's emergence in England was part of a project to annihilate
its humanist opposition, the Knights Templar. Total warfare
had broken out on the continent. The oligarchists in France and
Italy, Philip the Fair and Pope Clement V, slaughtered hundreds
of Templars, and burned the Templars' courageous Grand
Master, Jacques de Molay, at the stake in 1314.

A renegade group of Templars under the command of an
adventurous thug. King Robert Bruce, grabbed Scotland —
Europe's least civilized outpost — as an "offshore" stronghold,
as a form of insurance against their uncertain fortunes on the
European continent. King Robert Bruce is not only the spiritual
founder of the Scottish Rite of Freemasonry but the direct
ancestor, by unbroken lineage, of all the men of evil in England
who figure in this report.

After the death of Jacques du Molay, some Scottish
Templars. . . at the instigation of Robert Bruce ranged
themselves under the banners of a New Order (The Royal
Order of Scotland) instituted by this prince. . . It is there

180

DOPE, INC.

that we must seek the origin of the Scottish masonry,

(emphasis added) (5)

This statement by a leading historian of the Masonic

movement is the standard interpretation of the origin of the

Scottish rite.

The Family's Opium Wars

As the accompanying Family Tree indicates, there is a direct
lineage from the King Robert Brace to the British officials who
ran the first opium wars against China. James Bruce, the 8th
Earl of Elgin — after supervising the Caribbean slave trade as

Jamaican Governor General from 1842-46 — was appointed
Ambassador and Minister Plenipotentiary to China from 1857 to
1861 — the period covering the Second Opium War against China.
His brother Frederick Bruce had been Colonial Secretary at
Hong Kong during the mopping-up operations following the First
Opium War and returned to China in 1857 to assist his brother in
delivering the British government's ultimatum to the Chinese

emperor. (6)

The British Dictionary of National Biography summarizes the
Chinese career of the elder Bruce succinctly:

In 1857 Elgin was sent as envoy to China. On reaching

Singapore he was met by letters from Lord Canning
informing him of the Indian mutiny, and urging him to send
troops to Calcutta and from the force which was to
accompany him to China. With this requisition he at once

complied, sending in fact the whole of the force, but he
proceeded himself to Hong Kong in the expectation that
troops would speedily follow. . . .

He repaired to Calcutta. . . . Later in- the year he

returned to China, fresh troops having been sent out (to

replace those which had been directed to India — ed.). . . .
Canton was speedily taken and some months later a treaty
was made at Tientsin, providing, among other matters, for
the appointment of a British minister, for additional

HOW THE DRUG EMPIRE WORKS

181

facilities for British trade (i.e., opium — ed.). . . and for a
war indemnity, (emphasis added)

Elgin returned to England in 1859.

In the following year he was again sent to China, the
Emperor having failed to ratify the treaty of Tientsin and
having committed other unfriendly acts. . . . The military

opposition (to Elgin's mass addiction policy — ed.) was not

effective, but the Chinese resorted to treachery. (Chinese
forces killed some British troops enforcing opium distribu¬

tion — ed.). In retribution for this treacherous act, the
summer palace, the favorite residence of the Emperor at
Peking, was destroyed. A few days later the treaty of
Tientsin was formally ratified. (7)

The account concludes that Elgin's "letters show he was a man of
warm affections, eminently domestic, with very decided convic¬
tions on religion. ..."

Who was running England at the time? The prime minister was

the same Lord Palmerston who turned the Scottish Rite into

Britain's leading cash-producing export product. The foreign

secretary was Lord John Russell, son of the 6th Duke of Bedford,
and grandfather of Britain's most dangerous 20th century

intelligence operative —• Bertrand Russell.

Palmerston and Russell were relatives of the Bruce brothers,
the Elgin peerage, by marriage into the direct line of Order of St.
John control over England. The branch that encompasses
Britain's two leading cabinet ministers during the Second Opium
War is the Villiers line. The line began with George Villiers, who
assisted Robert Cecil and Edward Bruce in seizing the English
throne for another descendant of Robert Bruce — James I of
Scotland — in 1603. (8)

Lord Russell's daughter, Victoria, married into the Villiers

family. Russell's grandson, Bertrand, among his other covert

operations, maintained liaison with Chou En-lai throughout the
postwar period on behalf of British intelligence, at the height of
the Anglo-Chinese drug traffic. (9)

182

DOPE, INC.

Even more significant is the third member of the London team
during the Opium Wars — Colonial Secretary Edward Bulwer-
Lytton, a relation by marriage of the Duke of Wellington. His son
married Edith Villiers, of the same branch of the leading Order
of St. John dynasty.

The imperial cultists and opium

Bulwer-Lytton is best known to Americans through his 1838
novel. The Last Days of "Pompeii, but he is also both the spiritual
father of the Rhodes-Milner secret societies and of Nazi fascism.
A mystic and prenascent fascist, Bulwer-Lytton led the English
Rosicrucians, a branch of the Scottish Rite Masons headed by his
Prime Minister Palmerston.

Unlike the comparatively closed members of the British elite
around him, Bulwer-Lytton was an outspoken exponent of the Isis
cult, which formed the subject of his famous novel. His
popularized Isis myth was the inspiration for an entire array of
warped imitations.

Included among these was Helena Blavatsky's book, Isis
Unveiled, and her Theosophist cult. Theosophy was the Satanic
bible of the mystic secret societies, including Germany's
"Thule" group, which produced most of Hitler's SS. (10)

Another Bulwer-Lytton protege was satanist Aleister Crowley,
of the "Thule" group's equivalent in England, the "Isis-Urania
Hermetic Order of the Golden Dawn." Both of these groups
traced their lineage back to Palmerston's Scottish Rite Masons
through Bulwer-Lytton. (11)

Aieister Crowley was the tutor of Aldous Huxley, the prophet of
mind control, who later introduced the LSD cult into the United
States during the 1950s (see Part IV). (12)

Britain's imperial link to Nazi fascism is even more direct in
the case of Bulwer-Lytton’s other published work. His novel
Rienzi, about the Knights of St. John, provided the text of
Richard Wagner's first opera. His 1871 novel, Vril: The Power of
the Coming Race, contained virtually everything that Houston
Stewart Chamberlain later had to say on racial theory; Prof.

A victim of Britain's Opium War against the U.S.

2. Rudyard Kipling

3. The symbols of the Scottisch Rite of Freemasonry

4. Milton Friedman

5. Adam Smith

6. A 19th century Chinese opium smoker

v5i

lOTf 1

■■t«, « H BifVJ

H| kvf:^

A Chinese-American opium den (by artist Winslow Homer) as depicted in
Harper's, 1874

11. Giuseppe Mazzini

12. Chinese "coolies” — opium smokers

i — at work on U.S. railroad

13. Lehman Bros. (Lehman & Durr) office
in Montgomery, Alabama shortly after
the Civil War; the same building
houses The Oddfellows secret
society

14. Lincoln's assassination by John
Wilkes Booth, a British agent (artist's
depiction)

rr -iff

15. A mule-team convoy carrying opium through northern Thailand (1967)

16. Hillsides in northern Thailand devastated by the planting of opium poppies

17. A drug-stand in the open market place, Vientiane. Laos (1967)

18. Chin Sophonpanich, Chairman, with other directors of the Bank of
Bangkok

21. The Crown Colony of Hong Kong, financial center of the drug trade

22. Brian Slevin, Hong Kong Chief of Police

23. M.G.R. Sandberg, Chairman, The Hongkong and Shanghai Bank

24. The Hongkong and Shanghai Bank building

25. Hongkong and Shanghai emblem

26. Current notes issued by the Hongkong and Shanghai and the Standard
Chartered banks in Hong Kong; at bottom, an 1879 issue of the Anglo-Egyp-
tian Bank (Barclays)

TEN.'DOLLARS

£ TWENTY

1 'l^, (

1 ^J

1 I *•’

“* 1

I ^ VJV J

27. Henry Keswick, Sr., Managing Director, Jardine Matheson

28. Sir Mark Turner. Chairman Rio Tinto Zinc, and Governing Council, the Royal
Institute of International Affairs

29. John Keswick, Director, Matheson and Co.

30. David Newbigging, Managing Director, Jardine Matheson

31. Bars of gold distributed by Mocatta Metals

32. Harry Oppenheimer

33. Diamonds sorted by quality, shape and color

34. Henry Jarecki (c) with Edward Mocatta (r) and Keith S. Smith, Managing
Director. Mocatta and Goldsmid

35. A morning gold-fixing, N.M. Rothschilds, London (second from right, Edward
Mocatta)

36. "Bullion Pile" prepared for a visiting Queen Elizabeth II by Mocatta's parent
bank (valued at £6,000,000)

37. Mao Tse-tung with U.S. General Hurley, 1949: double-cross

38. Chinese Premier Chou En-lai, 1949

39. Bertrand Lord Russell

40. Walter Lockhart Gordon (r) with Peter C. Newman (c) and Abraham Rotstein of
Canada's "China Lobby"

41. Lord Amory, 31st Governor, G.T. Richardson, 32nd Governor, and A.J.
Macintosh, Deputy Governor of the Hudson's Bay Company in 1971

42. Queen Elizabeth II with Canadian Prime Minister Pierre Elliot Trudeau, 1978

43. Corporate emblems of the Canadian money-laundering banks: Bank of
Montreal, Bank of Nova Scotia, Canadian Imperial Bank, Royal Canadian Bank,
Toronto Dominion Bank

44. John Ruskin

45. Cecil Rhodes

46. Robert Cecil, Lord Burghley, who delivered Tudor England to the Order of
Malta's House of Stuart

47. Stuart James VI of Scotland, James I of England (1603-1625).

48. Grand Master of the Order of St. John of Jerusalem, Villiers de Nsle-Adam
entering Malta in 1530

49. The Seal of the Knights Templar

50. A 14th century Knight of St. John depicted kneeling before Rhodes, the
order's home base before the Hapsburg gift of Malta

50

51. Amschel Rothschild, 18th century German founder of the family's financial
empire

52. Nathan Rothschild, founder of the family's British branch

53. Prince William IX of Hesse Cassel, first patron of the Rothschilds, whose
Prussian field marshal's uniform is decorated by a Cross of Malta

54. Modern rites of the Order of St. John of Jerusalem

55. Winston Churchill in Warden of Cinque Ports costume for the 1953 coronation
of Elizabeth II

What the best drinks
have in common.

SfUjKM* ?Crou«

59. Edgar Broniman

60. The whiskey his father
Samuel ran into the USA

during Prohibition

Arnold Rothstein
Meyer Lansky

Thomas E. Dewey, re-organizer of organized crime
n the 1930s
Al Capone

Charles “Lucky" Luciano
ohnnyTorrio

Abner “Longie" Zwillman
'Bugsy" Siegel

ohn F. Kennedy, beginning the 1963 motorcade in
Dallas that ended in his assassination
Major Louis Bloomfield, wearing the Cross of Malta

70

71. The Beatles are introduced to America

72. The British intelligence cult of Hare Krishna

73. Aldous Huxley

74. Aleister Crowley, in robes of the Order of the Golden Dawn

75. Ancient Egyptian wall-painting, depicting the death rites of the Cult of
Isis (now in British Museum)

76. The Drug Lobby: Senators Jacob Javits and Edward Kennedy

HOW THE DRUG EMPIRE WORKS

215

Karl Haushofer, who ghost-wrote most of Mein Kampf in
Hitler's prison cell 50 years later, named his first secret
organization the "Vril Society." (13) Bulwer-Lytton's Nazi
German and British secret societies met officially for the last
time when Nazi minister Rudolf Hess attempted to make contact
in 1941 by flying to Britain.

Bulwer-Lytton directly influenced John Ruskin at Oxford
University and established the lineage that leads — through such
names as Milner and Rhodes — to the present-day Royal Institute
of International Affairs. Ruskin's students included Milner,
Rhodes, Albert Grey, and the future director of research for the
RIIA, Arnold Toynbee.

Ruskin's inaugural speech at Oxford in 1870, inspired by
Bulwer-Lytton, left such an impression on Cecil Rhodes that he
carried a handwritten version of it with him until he died. The
speech — which set the tone for Rhodes's 1877 will quoted in
Section 7 — stated in part:

There is a destiny now possible to us — the highest ever set
before a nation, to be accepted or refused. We are still
undegenerate in race; a race mingled of the best northern
blood. . . . We are rich in an inheritance of honour, which it
should be our daily thirst to increase with splendid
avarice. . . . (England) must found colonies as fast and as
far as she is able . . . seizing every piece of fruitful ground
she can set her foot on, and teaching these her colonists
that their . . . first aim is to advance the power of England
by land and sea.. . . (14)

Bulwer-Lytton's son Edward Lytton was Viceroy and
Governor-General in India 1876-80. Two aspects of the younger
Lytton's rule in India are important to this report. First, Lytton
supervised the single greatest expansion period in the history of
opium production in British India. (15) As noted in Part I,
Palmerston had set forth this task as a means of compensating
for Britain's industrial decline relative to the United States. It
was fitting that the son of his former cabinet colleague and fellow
cultist personally carried out Palmerston's opium-expansion
program.

216

DOPE, INC.

Secondly, Edward Lytton's rule in India provided a home for
the most important of the crackpot cultists inspired by his father.
Lytton himself was the closest friend of Rudyard Kipling's
parents, members of the circle around A. P. Sinnett's Allahabad
journal The Pioneer. (16) The elder Bulwer-Lytton's follower
Madame Blavatsky, of the Theosophy Cult, appeared in India in
1879, and recruited A. P. Sinnett to her belief-structure. (17) Both
Kipling and Blavatsky employed the swastika as their personal
mystic symbol. From Kipling, Blavatsky, Haushofer, and others,
the swastika found its way into the German cults that formed the
core of later Nazism.

Kipling's last major official post was under press czar Lord
Beaverbrook at the wartime Propaganda Ministry; working
side-by-side with him was a relative of the Lyttons’ by marriage.
Sir Charles Hambro. Hambro went on to run Britain's dirty
operations during World War II as chief of the Special Operations
Executive from 1942 onwards. Kipling also served as a trustee of
the Rhodes Trust from 1917-25.

Kipling's cousin, Stanley Baldwin, was prime minister from
1923-29 and 1935-37; during his second tenure, the Baldwin govern¬
ment groomed Hitler as a "marcher lord" against the Soviet
Union, setting the stage for Munich 1938. (18)

Another well-known British literary figure, also with a
mystical bent, deserves mention in this context: Alfred, Lord
Tennyson. Tennyson married the niece of the 8th Lord of Elgin
(James Bruce), and remained a close personal friend of the
commander-in-chief of the Second Opium War. Tennyson was a
founding member of the Metaphysical Society, with Bulwer-
Lytton's protege John Ruskin, Lord John Russell's uncle Lord
Arthur Russell, future prime minister Arthur Balfour, and
Thomas Huxley. (19) In 1880, the Metaphysical Society was
reorganized, and became the Aristotelian Society. Lord John
Russell's grandson Bertrand Russell became the Aristotelian
Society's President 1913-14 and 1935-37; one of his successors was
Sir Kail Popper. The Aristotelian Society remains the Apollonian
side of British intelligence's High Priesthood.

Tennyson's unambiguous endorsement of opium abuse was
expressed in his well-known poem, "The Lotus Eaters":

HOW THE DRUG EMPIRE WORKS

217

Let us swear an oath, and keep it with an equal mind.

In the hollow Lotus-land to live and lie reclined.

On the hills like Gods together, careless of Mankind. (20)

Today's opium dynasty

The closing days of the Baldwin government and the opening
days of World War II are an appropriate place to pick up the
contemporary trail of the leading opium families — the Inch-
capes and Keswicks. In 1939 the creation of Britain's Ministry for
Economic Warfare offered a meeting place for the old families:
Sir John Henry Keswick, later the architect of the Peking
Connection; Sir Mark Turner, the current chairman of the old
Matheson-Keswick firm Rio Tinto Zinc; Gerald Hyde Villiers, a
leading scion of the evil old family; and John Kidston Swire, of
the old Swire dope-trading family.

Starting from the Matheson family's role in the first Opium
War and tracing through to the World War II period and up to the
present, the fortunes of the Matheson and Keswick line of the
dynasty run the entire gamut of political developments sur¬
rounding the drug trade.

The Rio Tinto Zinc Company was founded in 1873 by James
Sutherland Matheson’s nephew Hugh Matheson — taking the
lineage of that firm all the way back to the days of George III and
the American Revolution through then-Prime Minister Spencer

Perceval. The younger Matheson founded the firm with his

uncle's opium profits and help from the Schroeder banking

family — who in 1931 funded Bulwer-Lytton's ideological spawn
Adolf Hitler. The Lyttons and Mathesons are relatives by
marriage, through the Villiers family and the Sutherland family.

Hugh Matheson's successor at Rio Tinto Zinc in 1898 was J. J.
Keswick, a partner in the opium-running Jardine Matheson firm,
and a relative of the Mathesons by marriage through the Fraser
family.

Apart from their leading role in Jardine Matheson, J. J.

Keswick's family had a leading role in the British governance of
the official opium trade. His cousin, William P. Keswick, was

218

DOPE, INC.

British Consul-General in Hong Kong during the same years that
Edward Lytton. Governor-General in India, was expanding
opium output according to the Palmerston program.

William P. Keswick's son Henry Keswick, a past chairman of
the Hongkong and Shanghai Bank at the height of its dope-trading
glory, had three sons: David, John H., and William J. David
Keswick is still among the largest shareholders and a partner of
the London merchant bank Samuel Montagu. Sitting with him on
the board of directors of Samuel Montagu is Rio Tinto Zinc's
current chairman Sir Mark Turner. Turner, as noted, also
worked with brother Sir John Henry Keswick in the Ministry of
Economic Warfare. Later, John Henry went on to the British
embassy in Chungking, picking up the opium trail where World
War II had cut it off (see Section 7).

The third brother. Sir William Johnston Keswick, is the
protagonist of Section 8 dealing with Canada; as previously
documented, Keswick ruled the Shanghai Municipal Settlements
at the height of Shanghai's heroin traffic, and set up the first big
heroin connection, via intermediary Jacob "Yasha" Katzenberg
(see Part III Section 1).

The family history of the Keswicks intersects the story of the
Russells, Villiers, and Bruces through their most senior political
operatives, notably Lord Milner. Milner, Cecil Rhodes's protege
and one of racist John Ruskin's early trainees, bridged the gap
between the establishment of the Rhodes Trust and the creation
of the Royal Institute of International Affairs in 1920. Milner
became a director of Rio Tinto Zinc in 1921, and served as
chairman from 1922 until his death in 1925.

More important, however, is Milner's joint work with the
Keswick family in setting forth the "geopolitical" policy than
finds its most succinct expression today in Britain's proposed
alliance with China against the Soviet Union. As documented
above, that policy includes a free hand for British drug-running.

This option first saw the light of day through the World War I
collaboration of Lord Milner, William Boyce Thompson, and
wartime British Commissioner in St. Petersburg, Frederick
Lindley. During his wartime mission to Russia, according to the
History of the London Times, a documentary source. Lord Milner

HOW THE DRUG EMPIRE WORKS

219

worked closely with Frederick Lrndley to install and then,
unsuccessfully, to maintain in power, Alexander Kerensky. (21)
This followed Britain's post-American-Civil War policy of
fostering a weak and dependent Russia.

Frederick Lindley was the grandfather of Henry Neville
Lindley Keswick, who currently occupies the traditional family
seats at the head of Jardine Matheson's directors and on the
board of the Hongkong and Shanghai Bank.
The third member of the Milner team, William Boyce Thomp¬
son, was the head of the Red Cross delegation in Russia; the Red
Cross is, officially, the "charitable" side of the Order of St. John
of Jerusalem. (22) After the war, Thompson, with funding

from the Morgan bank, established the Anglo-American mining
firm in South Africa — which now controls 60 percent of world
gold output outside the Soviet Union, and. through its controlling
interest in De Beers, virtually all the diamond output (see Section
4). That is the origin of London's top-down control over the

precious metals and gems channels for laundering dirty money.
To tie these strands back into the main line of the narcotics

traffic: Milner's hand-picked successor at Rio Tinto Zinc, whose
original mines were in Spain, was Sir Auckland Geddes. Geddes,
who ruled until 1952, was a sponsor of Francisco Franco's fascist
coup in Spain. (23) His nephew. Ford Irvine Geddes, was a
director and then chairman from 1971-72 of the lnchcape family's
huge shipping complex, the P&O Steamship Company, which has
shipped more opium than any other entity in the world.

One of P&O's officers, deputy chairman Sir Eric Drake, is a
close associate of Sir William Johnston Keswick, also of the old

Rio Tinto Zinc family (see Section 8). Drake and W. J. Keswick

jointly control Canada's Hudson's Bay Company, which
established the rum-running routes from Canada into the United

States during Prohibition, together with the Bronfmans.
The old lnchcape family, whose current scion, the 3rd Earl of
lnchcape, still is chairman of the P&O Lines, is closely related to
the Matheson family of Jardine Matheson. The founder of

Jardine Matheson, James Sutherland Matheson, was the son of
Katherine Mackay and Donald Matheson; Mackay is the family
name of the Earls of lnchcape. The 3rd Earl, J. W. Mackay, is the

220

DOPE, INC.

son of the 2nd Earl of lnchcape, who authored the infamous 1923
lnchcape Report, insisting that the opium trade must be
maintained to "protect the revenues" of the British Empire —
despite the outcry of the League of Nations.

Through the current Lord lnchcape, the old opium dynasty
married into the highest level of British banking. The afore¬
mentioned J. W. Mackay of the P&O Lines married Aline Pease,
his brother-in-law, Richard T. Pease, has been the vice-chairman
of Barclays Bank since 1970. Barclays Bank, as noted above, is
the controlling institution for the entire array of Israeli financial
operations, through its control over the current Japhet family
bank — Charterhouse Japhet. The current senior Japhet family
member, Ernst Israel Japhet, is now. the chairman of Israel's
biggest commercial bank. Bank Leumi. Barclays Bank controls
outright Israel's second-largest commercial bank, the Israel
Discount Bank, also known as Barclays discount bank.

Taking together the lnchcapes, Keswicks, Peases and related
families, control over London's banking establishment becomes
a swirl of intermarriages, to the point that the top London banks
and the scions of the drug trade appear as a single family entity,
rather than competing or even parallel institutions. Lor example,
the current deputy chairman of lnchcape and Co. — the family,
holding company that owns majority stock in the P&O Lines — is
Sir Hugh Mackay-Tallack. Mackay-Tallack is also the deputy
chairman of the Standard and Chartered Bank, the second-
largest bank in the Ear East after the HongShang. The 3rd Lord
lnchcape himself, J. W. Mackay, is also a director of Standard
and Chartered, along with cousin Sir Hugh.

As the reader can judge from the chart, the Pease branch of the
Lamily is further closely related to:

* The Schroeder Bank, whose chairman, the 10th Earl of Airlie,
is the brother-in-law of A. D. L. Lloyd, of the bank that bears his
name.

*Kuhn Loeb, whose leading partner was Otto Kahn; his grand¬
daughter is the wife of the 10th Earl of Airlie, the chairman of
Schroeder Bank.

* The family of Winston Churchill, whose mother-in-law is an
Airlie;

HOW THE DRUG EMPIRE WORKS

221

* The Lazard group, related to the Churchills by marriage;
Lazard controls the London Financial Times, the Economist,
Penguin books, as well as one of Britain's top merchant banks. It
should be remembered that the Lytton family and the Keswick
family are related to each other, via marriage through the
Fraser family, whose current leading member is deputy
chairman ofLazard.

The British and American Hofjuden are represented at the
borders of this complex. As noted, the 10th Earl of Airlie married
the granddaughter of Otto Kahn, Capo of American Hofjuden; his
sister, Margaret Ogilvie, married into a branch of the dynasty

(see chart) that, in turn, married into the Rothschilds.

The Rothschilds were the first of a number of leading families
to come up the ladder through intermarriage with the leading
families — an award for special service to the British monarchy.
Other prominent examples are the Kennedys and Bronfmans.

After a display of Anglophilia during his tenure as America's
Ambassador to the Court of St. James, Joseph Kennedy achieved
his ultimate social-climbing ideal: his daughter Kathleen
married the son of the 10th Duke of Devonshire. After their
elevation to the status of leading Hofjuden during the 1930s, the
Bronfmans intermarried with the French de Gunzberg family
and the Belgian Lambert family (the Belgian branch of the Roth¬
schilds). However, Edgar Bronfman's attempt to wed Caroline
Townshend, the direct descendant of the Lord Townshend who
precipitated the American Revolution through a tea tax, came to
naught. Shortly after their 1972 marriage, Edgar Bronfman sued
for divorce, on the grounds that the English noblewoman had
denied him connubial relations. Apparently, there are limits to
what the British families will suffer from social-climbing
Hofjuden.

Few even among specialist readers will appreciate how many
significant historical and intelligence problems of the last
hundred years are clarified, in one degree or another, by this
summary description of the Family. Only a small portion of the
names listed on the chart, or their historical significance, has
been presented in this section. Nonetheless, the point is
irrevocably established for the general reader that the

222

DOPE, INC.

individuals named throughout this section are part of a single
family operation, whose members take critical roles in
furthering the opium trade, financing the opium trade, and

directing the opium trade — wherever the opium trade is a
matter of public record. This includes every crucial juncture of
Dope, Incorporated: the period of opium production expandion in

India, the Opium Wars against China, the Shanghai Connection of

1928, the Peking Connection of the World War II period and after,

and the Opium War against the United States.

The point is also indisputably established that this has been and
is the policy of the British government and. through the Most
Venerable Order of the Knights of St. John of Jerusalem, the
British Monarchy itself.

The Dynasty of Robert Bruce

THE DRUG
FAMILY TREE

List of Abbreviations

A. D.C., aide decamp
Aff., affairs

Amb., ambassador

B. . baron

B.P., British Petroleum

Can., Canada
Chan., chancellor
Chm., chairman
Cons., consul

d.,died

Dau., daughter
Dir., director
Dpty., deputy

Env., envoy

Exch., exchequer

Extr., Min. Plen., extraordinary.

Minister Plenipotentiary

Fin., financial, finances

G.C.M.G., Grand Cross of St.

Michael and St. George
Geo., George
Gen., general
Gov., governor

HK, Hong Kong

Intell., intelligence

K.G., Knight of the Garter
KG. St. John, Knight of Grace of
the Order of St. John

L. G. St. John, Lord of Grace of
the Order of St. John

Lt., lieutenant
Ltd., limited

m., married
Mem., member

M. E.W., Ministry of Economic
Warfare

Min., minister
Mvmt., movement

Neth., Netherlands

P.M., Prime Minister
Pari., parliamentary
Pres., president
Ptnr., partner

R. I.I.A., Royal Institute of
International Affairs

RTZ, Rio Tinto Zinc

S. O.E., Special Operations
Executive

Soc., society

Tee., trustee
U-, under-
V., vice

• denotes chart overlap

-m.—Mary Ouero of Scut* Jane Stuart— m.- j ocll •

Loro Daralcj | 5ih Earl of Argyll

■ i*h 1 ,t:. f Sufhcr lathi
d.156?

MARLBOROUGH John Churchill

1st Duke of Marlborough

iwth J. Rettinger, Euro
Wnt.

|Mn. Detense 1357-59
ChTi LonrhO

DEVONSHIRE Edward Bruce Robert Cedi

__James-

Prances Gascoyne-- 11 ' 2 nd Marquis. K..G.

b. 1791

Henry Keswick

Duke of Wellington

Norman Mailer-m.-(tlau.)

• Hanna

6 TOT!-i

m . MhEarlotRoseoery]

Anthony G. I 1 I Zoc Lucic

N.tha'nid

Archibald J. Primrose

4th Earl of Rosebery

b.17»

HOW THE DRUG EMPIRE WORKS

241

Notes

1. BANKING AND THE WORLD'S BIGGEST BUSINESS

1. Based on interviews with Drug Enforcement Administration sources.
The typical deviation from the price trend resulted from the importation
of several kilograms of high-grade number four (85 to 95 percent pure)
heroin from Vietnam by individual returning soldiers, who would attempt
to start their own distribution chain. Such incidents stood out because the
novice distributor tended to dilute the heroin too little — often distributing
heroin at 30 percent purity and above, rather than 5 percent purity, the
normal dilution. The free-lance pusher would therefore occasion an
extraordinarily large number of drug overdoses, enabling the authorities
to spot him quickly.

2. The 700 ton figure is also used by the most widely circulated sources on
the subject, e.g., Alfred McCoy et al.. The Politics of Heroin in Southeast
Asia, (New York: Harper and Row, 1974).

3. The New York Times, January 20,1971, p. 1.

4. According to Drug Enforcement Administration estimates.

5. The $40 billion figure is almost certainly an exaggeration; it does not
count attrition of the marijuana crop because of Colombian or U.S.
government counteraction. Since Colombia is the primary supplier of the
American market, the likely figure is half that.

6. Euromoney (London), April, 1978.

2. FROM OPIUM TO DIRTY MONEY

1. The $100 per pound initial price is slightly higher than most estimates
cited in studies which date back to 1971 or earlier. Since the opium price is
principally measured in terms of gold, it is fair to assume a substantial
increase since 1971 when gold went for $42 an ounce. The $100 figure is
conservative, assuming that the raw opium price has doubled in
reflection of local inflation. But if the opium price has risen in tandem
with the gold price, the figure is much higher.

2 Calculated on the basis of price markups as reported by law enforce¬
ment sources in interviews with the authors.

3. The estimate was derived from the following calculations: At the 1971-
72 peak of heroin production in the Golden Triangle, much of which was
intended for American soldiers in Vietnam, 21 refineries were in opera¬
tion; since then the number has declined. Assuming that ten are still in
operation, and that the annual output of each is equivalent to the 3,000

242

DOPE, INC.

kilograms of heroin seized in one major bust on record, then they produce
roughly 30,000 kilograms a year of heroin, derived from about 300 tons of
raw opium.

4. Richard Deacon, The Chinese Secret Service (New York: Ballantine
Books, 1976), p. 447.

3. HOW THE DRUG TRADE IS FINANCED

1. London Financial Times, April 24,1978.

2. Ibid.

3. A close examination of the price markup structure of the Golden
Triangle's primary wholesalers demonstrates that the increased prices
at various stages merely account for substantial additional expenses,
including the livelihoods of an inestimable number of Thai and Burmese
policemen and customs officials. The real profitability — the enormous
profits associated with the traffic — depends on the process of cutting the
pure heroin into "decks" of street quality for sale in the West. The profits
of the Hong Kong syndicates who wholesale heroin are not accrued
through the difference between primary and secondary wholesale prices,
but as a percentage of the profits obtained through distribution of the
drugs in the West. In other words, the Hong Kong networks are directly
represented in the Western "organized crime" segment of Dope, Inc. and
take their cut in the form of a reflow of the retailing profits. Scattered bits
of evidence — the most prominent of which is the activities of the
expatriate Chinese community in Vancouver — indicate that this is, in
fact, how these syndicates operate.

4. The authors obtained briefings concerning — but were not able to see
— classified dossiers on Tejapaibul and Sophonpanich in the possession of
the American, Malaysian, and Thai governments. As noted below in the
text, they are "cut-outs" for the Hongkong and Shanghai Banking
Corporation. Tejapaibul, whose -bank handles most of Thailand's
chemical imports, developed the Golden Triangle's major source of
acetic anhydride, the chemical required to refine opium into heroin,
through a Hong Kong subsidiary of the Bangkok Metropolitan Bank.

5. Certain aspects of the expatriate Chinese activity antedate the British.
The relationship between Ch'ao Chou Chinese merchants and the Thai
royal family, for example, dates back several centuries. The predom¬
inance of Chinese compradors in the region, however, dates to the turn of
this century.

6. W. J. Cator. The Economic Position of the Chinese in the Netherlands
Indies, p. 97-98.

7. Victor Purcell, The Chinese in Malaya, p. 189.

8. William Skinner, Chinese Society in Thailand: An Analytical History,
p. 140.

HOW THE DRUG EMPIRE WORKS

243

9. International Currency Review, Vol. 10, No. 4, p. 145.

10. M. A. Andreyev, Overseas Chinese Bourgeoisie — A Peking Tool in
Southeast Asia (Moscow: Progress Publishers, 1974), p. 30.

11. V. Thompson, R. Adloff, Minority Problems in Southeast Asia
(Stanford: Stanford University Press, 1955), p. 13.

4. BRITAIN'S GOLD AND DIRTY DIAMOND OPERATIONS

1. Andreyev, Overseas Chinese Bourgeoisie, p. 120. In contrast to many
Soviet publications on the subject, the Andreyev book is a scholarly
monograph through nine-tenths of its extent, using quotations front
Western sources for most of its material. The propaganda factor is
comparatively small. Apart from the fact that it is a good survey of
Western literature on the subject, there is a special feature of this short
work that indicates its value to the investigator. The work is a classical
example of careful Soviet "surfacing" of their on-the-ground intelligence
reports, in such form as to make the conclusions politically useful,
without compromising their operations. The clear intent of publication of
the work is to put some heat on Chinese intelligence operations in the Far
Eastern theater. The occasional "zingers" Andreyev includes, such as
the report of Chinese import of gold through the Golden Triangle, are
intended for a small professional audience in other intelligence services.
To the extent the authors were able to cross-check Andreyev's facts with
Western sources, they have checked out. Therefore the authors believe
that the Andreyev work is an acceptable reference source.

2. Timothy Green, "Other World Markets," speech at the Gold Confer¬
ence of the London Financial Times and Investors Chronicle, The London
Hilton, October 24,1972.

3. Paul Ferris, The City (London, 1951).

4. H. R. Reinhart, The Reporter, July 22,1952.

5. Andreyev, The Chinese Bourgeoisie, p. 120.

6. Reinhart, The Reporter.

7. This information is a byproduct of a U.S. Labor Party counterintelli¬
gence investigation of the operations of the Israeli intelligence agency,
Mossad, for which Jarecki appears to be a "bagman." The details were
cross-checked with law enforcement officials.

8. According to interviews with leading diamond traders in New York.

5. HONG KONG: THE WORLD'S DRUG CAPITAL

Virtually all published sources identify Hong Kong as the world's
center for transshipment of opiates from the Far East, and even as the
center for heroin refining. For the most part, these admissions —

244

DOPE, INC.

encouraged by the local British authorities — are in error. In fact, heroin
is refined in the triborder area of the Golden Triangle itself. Once in the
compact form of heroin, the drug may be shipped by air, through indi¬
vidual couriers using a multiplicity of different routes. It need not pass
through Hong Kong at all, although Hong Kong is possibly the most
important of these various routes, and may conduct significant refining
operations. The British admissions concerning refining and transship¬
ment of opium and heroin tend to distract the investigator from the more
important issue: that Hong Kong is the financial center for the Far East
drug trade, and hence the point of control for the Golden Triangle.

The most recent American congressional investigation into Hong Kong,
in 1973, wrote:

The British Crown Colony plays a major role in the trafficking
and refining of narcotics which originate in the "Golden Triangle":

1) It serves as a major target for the production area;

2) The criminal syndicates behind the Southeast Asian drug
traffic are based in Hong Kong;

3) It serves as the refining center for "Golden Triangle" opium
and morphine base; and

4) It is a major transshipment point for heroin coming into the
U.S. and for transshipment to our 7th Army in Germany via The
Netherlands.

... It is estimated that 48 tons of opium are smoked in Hong Kong
annually and 4 tons of heroin are consumed. Local officials also
estimate that 4 to 10 tons of heroin is transshipped from Hong Kong
(primarily by body pack) to the United States annually, but
accurate information is lacking. Ten thousand dollars worth of
heroin in Hong Kong would retail for $50 to $60 million in the United
States.

From reports we received in The Netherlands, it is also apparent
that heroin is being transported by air and ship to The Netherlands
from Hong Kong to supply the 7th Army in Germany. The potential
for growth of these shipments is unlimited. . . .

Despite the recent steps to upgrade the enforcement effort, Hong
Kong will continue to act as a funnel for heroin destined for the
United States unless some fundamental changes take place.

Smuggling into Hong Kong is almost impossible to control
because: 1) it is a free port and the economy of the Crown Colony is
dependent upon its being easily accessible; 2) many drops are
made outside of the jurisdictional waters of the Crown Colony; 3)
personnel are not adequate; and 4) intelligence is lacking.

Since Hong Kong is a free port, there are no regularized customs
inspections. Also, most goods coming into Hong Kong are in sealed
containers. The Preventive Force, as a result, must rely primarily
on tips to conduct searches. The searches, however, are only of

HOW THE DRUG EMPIRE WORKS

245

vessels entering the harbor; not those leaving which could be trans¬
mitting narcotics to the United States, The Netherlands, or other
points.

A major obstacle, also, is the lack of cooperation from the
People's Republic of China. Many of the drops are made in Chinese
waters because the Chinese do not police their coasts for narcotics.
We were told that a Chinese vessel will ignore a trawler smuggling
narcotics. Moreover, since the British in Hong Kong are naturally

sensitive to their relations with the People's Republic, they care¬
fully observe territorial waters and are careful to avoid appear¬
ances that a crackdown on traffickers is a vendetta against the

Chinese. ...

The British in Hong Kong are also reluctant to recognize the

severity of the problem evidenced by the increasing availability of

narcotics, and to, correspondingly, take action. For instance, most
officials we spoke with were "uptight" about the recent report of
the House Foreign Affairs Committee which concluded that the
Hong Kong Government has been lax. They also resented the fact

that no one had talked to them before filing the report. (Report by
Hon. Lou Frey, Jr., Hon. Peter N. Kyros, and Hon. James F.

Hastings, Members of the Committee on Interstate and Foreign
Commerce, Concerning Narcotic Enforcement Efforts in Hong

Kong, Thailand, Burma, India, Lebanon, Greece, Turkey, France,
and The Netherlands; April 1973, pp. 2-11 passim).

Like most such documents, this report is loaded with inconsistencies,
although it contains occasional useful pieces of information. One such
item concerns the Hong Kong police force's most successful means of
discovering illicit heroin, noting that police "found drugs concealed in the
rectums of 40 defendants referred to them by the courts in one week."

Also useful is the report that Hong Kong consumes 4 tons of heroin and
48 tons of opium (medically equivalent to 4.8 tons of heroin annually),
from Hong Kong authorities. Taking this at the equivalent of 8.8 tons of
heroin consumption, the figure corroborates the charge in this section
that Hong Kong harbors one million drug addicts in a 5 million popula¬
tion. At standard 5 percent purity for street use, 1 kilogram of heroin will
yield 150,000 "decks," or single doses; 8.8 U.S. tons will yield roughly 1.2
million doses. A serious addict requires more than one dose per day, so it
Is hard to estimate the precise number of addicts; but it is clear that the
British figures, probably conservative, are in the required range.

The report that the PRC does not interfere with opiates transshipment
in its territorial waters speaks for itself, as does the statement that Hong
Kong serves as a base for the criminal syndicates behind the Southeast
Asian drug trade. However, the failure of the Congressional investigators
to cite police corruption at any point as an obstacle to narcotics enforce¬
ment in Hong Kong demonstrates how inadequate the effort was.

246

DOPE, INC.

There is nothing in the published literature concerning the financial
relationships between the Hongkong and Shanghai Bank and the Chinese
syndicates; information had to be obtained from interviews with
knowledgeable area sources, and compared to studies of financial
market mechanisms.

1. Andreyev, The Chinese Bourgeoisie, pp. 146-147.

2. Ibid.

3. Financial Times, July 4,1977, p. 24.

4. Ibid.

5. Ibid., p. 19.

6. Ibid.

6. THE PEKING CONNECTION

Following Kissinger's 1972 trip to Peking, American public and private
literature both have played down the "Peking Connection," to the point of
ridiculing existing and current evidence of People's Republic of China
involvement in the trade. However, an examination of these sources does
not reveal a single piece of evidence that the PRC role has stopped.

The current "standard reference work" on the Far East traffic is The
Politics of Heroin in Southeast Asia, by Alfred W. McCoy, with Cathleen
B. Read and Leonard P. Adams II (New York: Harper and Row, 1972). In
dismissing the claims of former Bureau of Narcotics and Dangerous
Drugs chief Harry Anslinger, McCoy quotes an unnamed BNDD agent
who dismisses Anslinger's accusations against Peking, saying that the
People's Republic of China has no role whatsoever in the opium trade,
and that Anslinger's accusations are substantiated by nothing more than
Taiwanese propaganda. McCoy cites no other evidence, and merely

brushes the issue aside.

In fact, McCoy and his co-authors went so far out on a limb that even
sympathetic experts were forced to correct them. In a review published
in the Bulletin of Concerned Asian Scholars in September 1973; Peter Dale
Scott wrote:

"McCoy quotes U.S. narcotics officials today to ridicule the 1950s

claims by then-U.S. Narcotics Commissioner Anslinger (and his govern¬
ment) about Communist China's 'twenty-year plan to finance political
activities and spread addiction' in the United States. But McCoy

subscribes to the equally dubious 'Turkey hypothesis' which replaced
Anslinger's in the 1960s; namely, that all of the U.S. plague of heroin

produced in the laboratories of Marseilles could be attributed to opium
grown in the Middle East. McCoy even claims that

Throughout the 1960s ... the U.S. Bureau of Narcotics paid almost
no attention to Asia, there were few seizures of Asian heroin and

HOW THE DRUG EMPIRE WORKS

247

little awareness of the colony's growing role in the international
traffic. It was not until American GIs serving in Vietnam began
using . . . heroin refined in the Golden Triangle region that any
attention was focused on the Asian heroin trade, (pp. 223-24)

"That is an important claim," reviewer Scott continued, "and it is quite
false. In 1960, as he knows, the United States officially listed Hong Kong
as the first of the 'principal sources' of the diacetylmorphine (heroin)
seized in the United States; and the Federal Bureau of Narcotics showed
its concern by opening a branch office in Hong Kong in 1963. Anslinger
himself, while transmitting KMT (Kuomintang, or Taiwanese — ed.)
propaganda about a Red Chinese opium conspiracy, proved himself to be
well-informed about the world-wide significance of the Northern Thai¬
land traffice, even to such details as the roles played by a Macao financial
syndicate, and a Bangkok official of the Soong Bank of Canton." Peter
Dale Scott's references are to Harry J. Anslinger, "The Opium of the
People's Government," in U.S. Congress, House, Soviet Total War, 85th
Congress, House Document No. 227, pp. 759-61.

The accuracy or inaccuracy of Harry Anslinger's presentation is not
what is in question at the moment. Rather, it is a simple point of fact that
McCoy and his co-authors have no facts whatever to indicate that the

PRC is not involved in the drugs traffic; and furthermore, that their
treatment of U.S. authorities who presented facts implicating the PRC is
wildly inaccurate. As the Scott review demonstrated, that is a matter of
the published record.

Experts on the Southeast Asian theater at the time McCoy wrote simply
doubt the author's integrity. McCoy had available to him a mass of docu¬
mentary evidence showing that roughly half of the Golden Triangle

growing area lay within the confines of Communist China's Yunnan
province. He also had available a substantial portion of corroborating
facts contained in this report. McCoy simply chose to ignore this
evidence, or, more accurately, to attempt to refute it with unsubstan¬
tiated assertions. According to individuals who knew McCoy when he was
a regular in the anti-Vietnam War movement, McCoy was in close
friendly contact with North Vietnamese legations in Western Europe at

the time of writing of The Politics of Heroin in Southeast Asia, and
intended his efforts to undermine the American war effort. In that
context he deliberately excised references to PRC opium trafficking.
Since the PRC and North Vietnam have come to blows over the status of
the expatriate Chinese comprador community in the latter country, it
may be that McCoy's political judgment, rather than North Vietnamese
views, were faulty on this subject. McCoy's book cannot be taken
seriously as far as the PR C issue is concerned.
McCoy, incidentally, does mention that expatriate Chinese syndicates

are the main traffickers in the Far East, and that Hong Kong is the main
transshipment center.

248

DOPE, INC.

Typical of public sources is a Congressional investigation of 1973 which
reported:

"There is no indication that the People's Republic of China is a source
of illegal narcotics coming to or through Hong Kong. A former American
missionary in China, now with SARDA (Society for Aid and Rehabil¬
itation of Drug Addicts — ed.), said that since 1965 not one addict from
China has appeared in Hong Kong. Prior to 1965 they arrived in droves.
Arrests and seizures also evidence no Red Chinese involvement what¬

soever in narcotics traffic in Hong Kong.

"It was interesting to note the reaction of the Government officials
regarding the 'Chinese connection.' They thought that such statements
were 'rubbish and either made out of ignorance or by individuals seeking
political gain.' To say they were emphatic would be an understatement.

"When the Communists came into power in 1949 in China, they imposed
the death penalty on anyone producing or consuming opiates. Users were
sentenced to long terms, which included building a road toward Siberia.
This was, in effect, a death penalty. Their success and continuing interest
in purging addiction from their society has removed China as a major

source of narcotics."

The report says further, "All officials acknowledged the fact that most
of the opium or morphine base coming into Hong Kong comes from either
Bangkok or the Gulf of Siam." (Report by Hon. Lou Frey, Jr., Hon. Peter
N. Kyros, and Hon. James F. Hastings, members of the Committee of
Interstate and Foreign Commerce, Concerning Narcotic Enforcement
Efforts in Hong Kong, Thailand, Burma, India, Lebanon, Greece,

Turkey, France, and The Netherlands; April 1973, p. 4).

These claims are worth examining one by one.

First, the Report does not seek to determine whether opium coming
into Hong Kong from Bangkok is, in fact, of Red Chinese origin.
According to our expert sources, the main PRC transshipment route

southwards, through the Golden Triangle, to Bangkok.

Second,, whether or not the "former missionary" source cited is
accurate, the appearance or nonappearance of drug addicts from the
PRC mainland is utterly irrelevant to the issue of PRC involvement in the
wholesale drug traffic. Moreover, the citation of 1965 as the end-point of
PRC traffic is suspicious, since the hardest evidence of all — Chou En-
lai's recorded boasts on the subject — dates from that year.

Third, the authority cited by the Congressional delegation is the Hong
Kong Government itself. The integrity of the Hong Kong authorities may
be judged from material presented in Section 5 of this report. The utter
ingenuousness of the Congressional document cited, however, may be
gauged from its enthusiasm for the Hong Kong police: "We were
impressed by the desire of the Service to do a job. Their frustration was
also apparent. They'll give it 100 percent, but no matter how much they
try —or how good a job they do —it's just too big for them" (p. 10).

HOW THE DRUG EMPIRE WORKS

249

Two years after the publication of this document, the Independent Com¬
mission Against Corruption in Hong Kong made its official estimate of a
$1 billion annual rate of police bribery in the colony.

The most complete British work on the subject, Richard Deacon's The
Chinese Secret Service (New York: Ballantine Books, 1976) merely
ignores the issue, and defends PRC motivations! He argues, "If opium
could be introduced into a country that did not wish it in peacetime by a
so-called civilized Western Power, with the connivance of its Govern¬
ment, how can the British adopt an outraged critical tone towards China
for copying her own tactics, not by having opium forcibly imported this
time, but by exporting the stuff to try to check such a war as that in
Vietnam, which threatened to go on indefinitely. . . . Can one blame
China, however intrinsically disgusting the tactic may be, for manipu¬
lating an 'opium war in reverse'?" (p. 441).

Deacon does admit, "Many nations and many individuals are in the
drug game solely for sordid commercial gain. It is essentially an inter¬
national problem, but that should not blind one to the fact that only in the
hands of the Chinese Communists has it been used almost solely as a sub¬
versive weapon and for financing, by an opium war in reverse, a great
many of their espionage operations."

After 1972, American officials accepted the official line that China had
ceased to be an exporter of opiates, although they never liked it. A case in
point was Gen. Lewis W. Walt, a retired Marine Corps officer who
became the chief investigator for a set of hearings on "World Drug
Traffic and Its Impact on U.S. Security" (see note 27 below). On
September 14, 1972, Walt states, "The official U.S. position today is that
we have no evidence that opium or opiates are coming out of Communist
China." However, a specialist familiar with the intelligence reports that
made up the raw material of Gen. Walt's briefing to the Subcommittee,
said, "It is highly significant that he used the word evidence, rather than
information. That is an intentional dodge. He is playing a word game:
evidence is a legal term, and may exclude information. Had he used the
word information, he would have had to explain away a couple of hundred
reports coming in at the time."

Walt continued, "There can be no question that large quantities of
opium were coming out of China in the 1950s and early 1960s. . . . The
Director of British customs at Hong Kong also told us that they had no
evidence that opiates were coming out of China. On the other hand, he
informed us frankly that they were not looking for evidence — that, for
political reasons, they do not search ships or cargo coming out of
mainland China. An identical situation prevails in Portuguese Macao."

1. Heikal, Mohammed Hassanein, The Cairo Documents (Garden City,
N.Y.: Doubleday and Company, 1973), pp. 306-307.

2. The significance of the investment, which occasioned widespread com-

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mentary in the Western press, is not so much the novelty of the joint-
venture format, but the surfacing of longstanding business relationships
between Jardine's and the PRC.

3. London Financial Times, July 4,1977, p. 20.

4. Interviews with law enforcement officers. Law enforcement author¬
ities suspect, but have never proven, that the Shaw Brothers' inter¬

national film distribution network also conduits narcotics.

5. Deacon, Chinese Secret Service, pp. 437-438.

6. In 1949, according to recently released American diplomatic cables,
the newly formed PRC was happy to permit Britain to retain control over
Hong Kong for the same reason.

7. Management Magazine (South Africa), December 1975. The Rennie

and Matheson families' relations go back much further than the re¬
cent merger of business operations. They are intermarried through the
Ogilvie family, which is itself intermarried with the current British royal
family. The Rennies are core members of the British establishment in

South Africa. For example, relative Julian Ogilvie Thompson is a

member of Anglo-American Corporation's three-man operating com¬
mittee (see Section 4 for details on Anglo-American's role in dirty money
operations). The Rennies show up prominently in British diplomatic and

military posts throughout Africa and Asia, e.g., Sir John Shaw Rennie
was Governor and Commander in Chief of Mauritius (1962-68), and Sir
Gilbert McCall Rennie was Governor and Commander in Chief of

Northern Rhodesia in 1952.

8. The Economist, September 2,1978.

9. The authors benefited from an unpublished letter, "Jardine's Octopus
in Southern Africa; Rennie's Consolidated Holdings," by David Cherry of
the Africa staff of Executive Intelligence Review.

10. Peking's influence on the international gold market has been the

subject of considerable commentary in the financial press; during 1977
the Bank of China suddenly released about 80 tons of gold onto the inter¬
national markets, a move which commentators believed depressed the

gold price. What commentators were then at a loss to explain is how the
PRC, which runs a chronic balance-of-trade deficit, was able to obtain the
gold in advance of selling it off. Peking's role in the gold-related aspect
of opium financing provide some explanation.

11. International Currency Review, Vol. 10, No. 4, p. 146.

12. Harry J. Anslinger, The Murderers (New York: Farrar, Straus, and
Cudahy,1961).

13. "World Drug Traffic and Its Impact on U.S. Security," Hearings

before the Subcommittee to Investigate the Administration of the

Internal Security Act and Other Internal Security Laws of the Committe
on the Judiciary, United States Senate; 92nd Congress, Second Session;
Part 3, The International Connection; September 13,15,1972, p. 101.

14. Haikal. Cairo Documents.

HOW THE DRUG EMPIRE WORKS

251

15. Anslinger, Murderers.

16. Harold Chang, "U.S. Sanction Threat to HK Over Drugs," South
China Morning Post, August 18,1977.

17. Isvestia, February 17, 1978 (article by Bandura based on an article in
the Japanese weekly, Shukan Bunshun, by N. Otiai).

18. According to interviews with Far Eastern and Soviet specialists, the
figure Liternatura cited was "laundered" through a series of different
Soviet conduits and publications during the 1960s, in a form typical of Sov¬
iet "surfacing" of hard intelligence for more general consumption. This
particular report is taken much more seriously by Western specialists,
than, for example, Soviet claims that the PRC at one point had 35,000 tons
per year annual opium production — enough dope to keep the entire U.S.
population addicted.

19. Reported in the Indonesian journal Buana Minggu, December 12,
1972. Many similar reports came through during the same period,
including the following item from Indonesia as reported in the December

29, 1970 issue of Foreign Broadcast Information Service Daily Report:

Djakarta — The weekly CHAS has signaled the possibility that
Adjitorop, former Brigadier General Suharjo, and other elements
of remnants of the G-30-S/PKI who lived in communist China, the

Soviet Union, or other communist countries, continue to operate in
Indonesia. According to CHAS, they often come to Singapore using

foreign passports and fake names and disguised, because of

Singapore's proximity to Indonesia.

In view of the great risk of capture by Indonesia state agencies,
these elements use Singapore for their subversion against Indo¬

nesia. The attempts to crush the Indonesian republic by remnants
of the G-30-S/PKI also depend on assistance from and subversion
by the above states.

This was the observation of a correspondent of the weekly CHAS
who recently visited Singapore, North Sumatra, Riau, and West
Kalimantan.

According to CHAS, Indonesia is one of the targets for subversion
by communist China in fighting the Soviet Union and its allies, and
in the struggle between the communists and the West.

To attain their purpose, all sides employ all kinds of methods to
mobilize local forces, which in the current new order oppose and
undermine the Indonesian republican government overtly and
covertly. Among these forces are remnants of the G-30-S PKI and
groups which are defending the political principles of the old order.

In launching its subversion, communist China conspicuously
combines trade activities with the dissemination of communist
ideology and instigation to rebel against the Indonesian
government, CHAS concluded.

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DOPE, INC.

20. U.S. intelligence agencies had the same problem with the Ch'ao Chou
element in the Chinese Communist Intelligence Service that Japanese
interpreters had with American radio dispatches during World War II;
American military forces employed Sioux and other Indians for certain
classified radio transmissions, for which the Japanese had no
interpreters. The entire American government had, during the early
1970s, only two employees capable of translating the Ch'ao Chou dialect.
How extensive this network is, therefore, remains a matter of mystery.
One disturbing feature of the New York City incident is that the Ch'ao
Chou contact had with him the business card of the local Ch'ao Chou
fraternal association in New York's Chinatown (See Note 3, Section 3).

Virtually the only published source indicating the Ch'ao Chou operation
is John Le Carre's The Honourable Schoolboy (New York: Alfred A.
Knopf, 1977). Its leading character is Drake Ko, supposedly a Hong Kong
kingpin of narcotics traffic with an Order of the British Empire and a
brother in the Chinese Politburo. "They'd come up from Swatow, the two
of them," a Le Carre character remarks of Ko and his brother. "They
were boat people, Chiu Chow." Le Carre's novel, according to highly
informed sources, is a straight roman a clef from the files of British
intelligence; most of the individual characters are scarcely disguised
real figures in the Ear East drug traffic and mercenary scene. The book's
apparent intent, to portray fictionally the replacement of British intell¬
igence-power in the Far East by the CIA's, is patent nonsense. The
interesting question is how Le Carre became so well-informed; his
acknowledgements are to British intelligence and police sources.

21. Daniel Insor, Thailand: A Political, Social, and Economic Analysis,
(London: 1965), p. 135.

22. A. Doak Barnett, Communist China and Asia (New York: 1960), p. 186.

23. The Chinese Bourgeoisie, p. 67.

24. Ibid., p. 154.

25. Ibid., p. 120.

26. Ibid.

27. Statement of Gen. Lewis W. Walt, before the Subcommittee to
Investigate Administration of the Internal Security Act and Other
Internal Security Laws of the Committee of the Judiciary, Hearings on
"World Drug Traffic and its Impact on U.S. Security," Part 4, September
14, 1978, p. 160. "Communist guerrillas in Thailand are in control of an
important stretch of opium-growing land on the Laos frontier," Walt
testified. "The most serious insurgency is the White Flag Communist
Party. . . it is Peking which has armed the insurgents and trained their
leader, and supports them with a China-based radio operation. Over the
past year, the White Flag Communist insurgency has grown to the point
where it absorbs up to 80 percent of the counterinsurgency efforts of the
Rangoon government. All the armed groups in Burma, pro-communist or
anti-communist, have been involved in the drug trade. . . .The area that

HOW THE DRUG EMPIRE WORKS

253

the Communists control is estimated at 25 percent of Burma's total
(opium) production. Burma produces 400 tons of opium a year." The
authors cross-checked Walt's testimony with U.S. Foreign Service
officers and found the above statement to be accurate.

28. Apparently, the relatively small city of Swatow was the center of an

extraordinary prerevolution network of mainland financial links with
expatriates that was maintained intact after the PRC was established.

The remittance agencies, based in Swatow, Amoy, and Canton, had 1,000
branches throughout Southeast Asia as of 1950. After the revolution, the
PRC government transformed them into an intelligence operation,
employing the agents of the remittance companies abroad for intelli¬
gence-gathering purposes. Once the external financial operations of

Peking's state banks got off the ground, however, the remittance

companies were merged into the new apparatus.

29. Andreyev, The Chinese Bourgeoisie, p. 111.

30. Ibid., p. 117. Much of this is of a directly political nature. "Mention
must also be made," the Soviet author says, "of the large contribution
made by overseas Chinese businessmen towards financing the operation
of PRC representatives in Southeast Asian countries (Burma and — until
recently — Cambodia and Indonesia). Although in the given case these
large contributions are spent in the countries concerned, they are neither
more nor less than a clandestine form of sending foreign exchange to the
PRC. In some cases local Chinese businessmen helped to finance the
propaganda campaigns of the PRC embassies, the current expenses of
embassies and missions and even the implementation of the economic aid
agreements signed by the PRC. For example, the building of four

factories in Cambodia under an economic aid agreement signed with the
PRC was financed by local pro-Peking businessmen." However.
Andreyev's data, the most current available, drop off at the critical
period; no figures are available for the joint venture investments. The
more recent picture was filled out through interviews with American and
Southeast Asian specialists on PRC external finances.

7. T HE ROYAL INSTITUTE OF INTERNATIONAL AFFAIRS

1- John Flint, Cecil Rhodes (Boston: Little, Brown, and Co., 1974).

2. U.S. State Department, Foreign Relations of the United States, 1949,
Vol. VII: "The Far East: China."

3. Christopher Thorne, "Chatham House, Whitehall, and Far Eastern
Issues: 1941-45," International Affairs, January, 1978. The authors were
compelled to rely on this summary rather than the original documents of
the Royal Institute itself. However, the Thorne article is by a member of
the RIIA, and published in the RIIA's own journal, and may be
considered an authoritative representation of the RIIA's views

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DOPE, INC.

concerning its own history. The 1977 release of RIIA papers was,
unfortunately, selective. Thorne notes, "The preparation of this article
was greatly facilitated by a grant given to the Royal Institute of Inter¬
national Affairs by the Leverhulme Trust, which enabled the Institute to
put its archives in an order more readily accessible to researchers. With
the exception of papers dealing with the internal affairs of the Institute,
those archives more than thirty years old are now open to bona fide
research workers." The RIIA, of course, decides who is or is not bona
fide.

4. State Department, Foreign Relations, pp. 1289-92.

5. Chou En-lai represented the CP in its "United Front" in Chungking
with the Kuomintang during these years.

6. Thome, "Chatham House," p. 20

7. Peter Vladimirov, Vladimirov Diaries, (Doubleday & Co.: 1976).

8. Thome, "Chatham House," pp. 4-5.

9. Ibid.

10. The ties of Ronning and Endicott to China go back very far and have

served as a crucial contact between British policy and the PRC. Endicott
was born of missionary parents in China in 1899, and worked there as a
Methodist minister for many years. By the time of the 1927 Shanghai
massacre of communists by the KMT, Endicott admitted in a discussion
that he was already working as an advisor to Chiang Kai-shek. In the

early 1940s Endicott underwent a "Damascus Road" transformation to

Marxism and became a supporter of the CCP. He became close to Chou

En-lai during this time. Following his return to Canada, Endicott formed
a newsletter which reported on the PRC and was a founding member of
the Norman Bethune College at York University, working closely with

Chester Ronning.

Ronning, also born in China of missionary parents, was in the Royal
Canadian Air Force Intelligence during World War II. With the end of the
War, Ronning became a Canadian foreign officer in China, during which
time he developed close relations with CCP leaders, especially Chou En-
lai, and current PRC Foreign Minister Huang Hua. Ronning argued
strongly for Western recognition of the PRC after 1949, as did the leaders
of the Far East Group of the RIIA, and was recognized as a friend by PRC
leaders. Ronning served as translator for Huang Hua, who was the
official spokesman for the PRC in the aftermath of the Communist
victory. When China began diplomatic openings to the West in the early
1970s, Canada was one of the first countries chosen for normalization.
Ronning's friend Huang Hua was the PRC's first ambassador to Canada.

Investigations have shown that both Paul Lin and Endicott maintain
extensive ties to Canadian Maoist organizations, and through them, to
international terrorist organizations. Ronning is known by professional
intelligence officers to play a higher "coordinating" role at the
government level of terrorist deployment; Endicott and Lin handle the

HOW THE DRUG EMPIRE WORKS

255

"field work" with the Maoists. (The information here is derived from
team interviews with Endicott himself and associates of Paul Lin.)

11. Thome, "Chatham House," p. 27.

12. State Department, Foreign Relations, pp. 1289-92.

13. Ibid.

14. Christopher Wren, New York Herald Tribune, January 16,1948.

15. State Department, Foreign Relations, pp. 1289-92.

16. U.S. Senate, Committee on the Judiciary, 82nd Congress, First
Session, Subcommittee on Internal Security, Hearings on the Institute for
Pacific Relations, Part I.

17. State Department, Foreign Relations, pp. 331-332.

18. U.S. Senate, Hearings on the Institute for Pacific Relations, Part I.

19. Ibid.

8. CANADA: NORTH AMERICA'S HONG KONG

Most of the source material from this section came from analysis of
bank and corporate annual reports and Who's Who entries; a simple
cross-correlation of such information produced an unbroken trail of dope
and dirty money from the Far East, through Canada, into the United
States. The business, legal, and accounting relations noted here are all a
matter of public record. In addition, the authors interviewed several
former and serving Canadian and American law enforcement officers,
who have had Walter Lockhart Gordon and his Canadian "China
Lobby" under scrutiny for years.

1. An egregious example of British intelligence activity in Canada is the
formation of the British Newfoundland Corporation (Brinco) in the early
1950s. This project was planned by Winston Churchill, the Rothschilds,
and Newfoundland's Premier Joseph "Joey" Smallwood, a Master
Scottish Mason. According to Virginia Cowles's book on the Rothschilds
(1973):

In 1951 shortly after Winston Churchill had become Prime Minister
for the second time, he received Mr. Smallwood, the Premier of
Newfoundland. Smallwood unfolded plans for a vast development
scheme in Labrador and Newfoundland. To carry it out British
capital was needed on a truly mammoth scale. . . . When the con¬
sortium of firms was formed (Churchill) was delighted that N. M.
Rothschild & Sons should head it.

Participation in the founding of Brinco included the leading firms
involved in Dope, Inc., including Morgan, Grenfell, Kleinwort and Sons,
Rio Tinto Zinc, Anglo-American Corp., and Prudential. Cowles adds,
"Brinco's terms of reference were breathtaking: the exploratory right to

256

DOPE, INC.

sixty thousand square miles in Newfoundland and Labrador, an area
larger than England and Wales. . . ."

In Smallwood's autobiography (New American Library, 1973), he
identified himself: "In 1967 (I) enjoyed immensely the distinction of
being installed in office (as Master Mason) by the Grand Master Mason
(Scottish Constitution) Lord Bruce, who came from Scotland especially
for the purpose. So I met the direct descendant of King Robert the Bruce.
Proud? Oh, yes."

Brinco's board of directors today includes Mark Turner, the chairman
of Rio Tinto Zinc, former member of the RIIA Council; Edmund de
Rothschild, the president of N. M. Rothschild and Sons; and Sam Harris,
the New York lawyer who is a director of Rio Tinto Zinc and whose law
firm represents RTZ as well as the Kaplan Foundation, a funder of
environmentalist groups. In court papers filed by the Westinghouse
Corporation, Harris was named a conspirator in a plan to raise artifi¬
cially the price of the world's uranium 800 percent during the 1970s.

2. This piece of information was an incidental product of a Labor Party
countersurveillance operation against a number of individuals associated
with the top management of Drexel Burnham Lambert.

3. A. J. Colin, Pro-Consul in Politics (New York: Macmillan, 1964).

9. ALL IN THE FAMILY: THE REAL SYNDICATE

1. The cult of Isis was developed in ancient Egypt no later than the Third
Dynasty of the Old Kingdom, approximately 2780 B.C., and represents
one of the earliest formal articulations of the entropic and backward
ideology of mother-worship. As known to the Priesthood of the Temple of
Isis — true believers themselves — the Isis cult formalizes the elements
of a capability for social control, exploitation, and destruction of creative
free will in subject populations. The elements include:

•Use of various schizophrenia-inducing drugs;

•Use of repetitive, heteronomic sounds to supplement the effect of
psychotropic drugs, and to create a societal aesthetic that endorses and
encourages use of the drugs;

•Creation of synthetic cults based on the original reactionary Isis myth,
but specific to the psychological profile of the population which the
priesthood has targeted for subversion;

•Enforcement of a political-economic model antagonistic to general
human progress, and containing targeted populations within non-
creative, manual slave-labor projects (e.g., pyramid-building).

This combination of Pharaonic cult capabilities was taken as a model
for further refinement in this century by the British Secret Intelligence
Service's Tavistock Institute in London — an institution which launched
the "counterculture" in the United States and Europe, based on the very

HOW THE DRUG EMPIRE WORKS

257

drugs, mescaline and hashish, the Ancient Priesthood had employed (see
Part IV).

2. Carroll Quigley, Tragedy and Hope (New York: Macmillan Co., 1974),
p. 131. The "Circle of Initiates" formation was explicitly modeled after
the ancient Isis Priesthood.

3. R. S. Clymer, The Book of Rosicruciae (1947), Vol. II, p. 106.

4. See Lyndon H. LaRouche, Ir., "Is limmy Carter Truly a Christian?,"
New Solidarity, Vol. IX, No. 64, October 13,1978.

5. Cited in Nesta H. Webster, Secret Societies and Subversive Move¬
ments (London: Boswell Printing and Publishing Co., 1924), p. 115.

6. Their father, the 7th Earl of Elgin, was famous for his theft of the
"Elgin Marbles" from Greece, smuggling them to the British Museum.

7. Dictionary of National Biography (London: Oxford University Press,
1968), Vol. III.p. 104ff.

8. Jean de Villiershad was the Master of the Knights of St. John of
Jerusalem from 1285-93, when the preparations for the slaughter of the
Knights Templar were undertaken. Philippe Villiers de lisle Adam was
the Grand Master of the Knights of St. John in France from 1521-22, and
was the first Grand Master in Malta from 1530-34. Today Sir Charles
Villiers, who was the managing director of J. Henry Schroder Wagg from
1960-68, is the chairman of the British Steel Corp. Sir John Michael
Villiers, a Knight of St. John, was the Queen's Harbour Master Malta
from 1952-54, and Lieutenant-Governor of Jersey, an offshore banking
center, from 1964-69.

9. By his own testimony in various writings. Lord Russell was in periodic
contact with the Communist Chinese regime and Premier Chou in
particular after 1949.

10. For example, Rudolf Hess and Professor-General Karl Haushofer,
ghost-writer of Mein Kampf; Alfred Rosenberg. Nazi Minister of Foreign
Services; Max Arnann, Editor in Chief of Nazi Publications; Hans Frank,
Nazi Governor-General of Occupied Poland during World War II; and

several members of the Wittelsbach family (the Bavarian royal family)
who sponsored much of Adolf Hitler's career. Hitler himself was an
associate of the society, known as a "Visiting Brother."

11. The connection is visible in the 1866 founding of the "Masonic Rosi-
crucian Society" whose leaders, Mathers, Wescott, and Woodman, also
formed the Isis-Urania Temple of the Hermetic Students of the Golden
Dawn in 1886. The Golden Dawn group, by 1890, included the mystic poet,
William Butier Yeats, former Secretary of the Theosophist Society.
Aleister Crowley was the order's historian during the period of Yeats's
association with it.

12. The LSD cult was a creation of the Royal Institute of International

Affairs and its psychological warfare arm, the Tavistock Institute (see
Part " IV).

During the late 1960s — at the height of the "counterculture" and

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DOPE, INC.

"hippy movement" in the United States — the Director of the RIIA,
Andrew Schonfield, was a member of the Tavistock Institute's Governing
Council. In 1967, during Schonfield's tenure at RIIA and Tavistock,
Tavistock's leading Staff Psychologist, R. D. Laing, published his book.
The Politics of Experience, which advocated schizophrenia ("madness is
the only sanity") and drug use. Laing writes:

I want you to taste and smell me, want to be palpable, to get under
your skin, to be an itch in your brain and in your guts that you can't
scratch out and that you can't allay, that will corrupt and destroy
you and drive you mad.

During the 1960s, the Tavistock Institute received large grants from the
Ford Foundation, the British Center for Environmental Studies, the

British Defense Ministry, Harvard University, and at least £22,797 from
the Social Science Research Council, of which Schonfield was chairman
at the time.

13. See Robert Cohen and L. Wolfe, "Karl Haushofer's Mein Kampf,"

New Solidarity, Vol. IX, No. 45, August 7,1978.

14. Cited in John Flint, Cecil Rhodes, p. 27.

15. Martin Fido, Rudyard Kipling (New York: Viking Press, 1974).

16. Ibid., p. 35.

17. See Harbans Rai Bachchan, W. B. Yeats and Occultism (Delhi:

Motilal Banarsidass, 1965).

18. See Lyndon H. LaRouche, Jr., "Hitler: Runaway British Agent,"

New Solidarity, Vol. VIII, No. 87, January 10,1978.

19. Tennyson in 1820 had been a member of the "Cambridge Apostles"
which initiated the Metaphysical Society in 1868-69. Other members of the
Metaphysical Society included H. W. Ackland, the Duke of Argyle,
Alexander Campbell Fraser, William Gladstone, Shadworth Hodgson,
and Walter Bagehot. This group included prominent members of the
Society for Psychical Research, Mind magazine, and the Fabian Society.

20. Verse 8 of the Choric Song of the poem.

21. History of the Times, Vol. IV: 1912-1920 (New York: Macmillan Co.,
1952), p. 244. The relevant section reads:

On Jan. 19, 1917, Milner left London at the head of an Allied mission
which, during three weeks in Petrograd, laid down a suitable
scheme for keeping the Russian forces supplied with Western
munitions. ... It was widely believed at the time that the February
Revolution (installing Kerensky — ed.) was hatched at the British
Embassy.

22. After the destruction of the Knights Templar in the 14th century, the
Knights of St. John appropriated the Templars' Red Cross symbol into
their own iconography.

HOW THE DRUG EMPIRE WORKS

259

According to Ferdinand Lundberg, America's 60 Families (New York:
Vanguard Press, 1937), p. 146ff:

The Russian Mission of the Red Cross was headed by Col. William
Boyce Thompson and Col. Raymond Robbins . . . (who) used the
Red Cross to forward the war aims of Wall Street in a way unsus¬
pected by the American people. The purely political function of the
Red Cross is not generally appreciated even today.

. . . Thompson and Robbins, according to their own statements,
functioned in Russia as a political arm of the War Department.
Their crowning achievement was the purchase of enough delegates
to the All-Russian Democratic Congress (to support Kerensky —
ed.). The cost of seducing this congress was $1,000,000.

Winston Churchill's wife, Clementine, a Commander of the Order of St.
John, served as the Chairman of the Red Cross Aid to Russia Fund from
1939-46. The same uses of the "Red Cross" cover for intelligence
operations is implicit in the fact that a direct descendant of King Robert
Bruce of Scotland, David Bruce, was the Chief Representative of the
American Red Cross in Britain in 1940, and one year later, in 1941,
became head of Office of Strategic Services (OSS) Operations in the
European Theatre; the same David Bruce, during the Nixon Administra¬
tion years, was selected by Secretary of State Henry Kissinger to be Chief
of the U.S. Mission to the People's Republic of China from 1973-74, and
then became U.S. Ambassador to NATO from 1974-76.
23. For example, in his April 1938 Annual Report to the Shareholders of
Rio Tinto, chairman Geddes noted that:

Our company has received recently a great deal of attention in the
press of many countries. Propagandists possessed of lively
imaginations but devoid of respect for accuracy have told the world
of our doings. In result a lot of nonsense has been published,
evidently designed to suggest that your Board is composed of
violent fascists actively participating on the side of General
Franco. I read the other day an article in which it was stated as a
fact that we had sent in a year 300,000 tons of copper to Germany
and 65,000 tons to Italy to pay for supplies from those two countries
to General Franco. . . . This is just rubbish. ... I have seen it
stated in the press that we . . . your Board . . . "gave" . . . help to
General Franco's cause. It depends on your meaning of the verb
"to give."

Significantly, in 1923's Annual Report by then-Chairman Lord Alfred
Milner, it was stated that "The constantly increasing burden of taxation,
especially in Spain, where the (republican — ed.) government is
evidently convinced that it can never kill the goose that lays golden

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DOPE, INC.

eggs. ..." (See David Avery, Not On Queen Victoria's Birthday: The
Story of the Rio Tinto Mines, London, 1973, pp. 37 Iff.)

Auckland Geddes' grandfather had been the Hudson's Bay Company's
official agent in Scotland. His second nephew, Anthony, was a member of
the Governing Council of the Royal Institute of International Affairs in
1949, alongside Sir Mark Turner, Rio Tinto's current chairman. The same
Anthony is a director of the Midland Bank.

PART

Organized Crime

Introduction

We have now taken the reader through the production and
wholesaling phase of Dope, Incorporated. We have introduced
the Far East clearinghouse bank, the Hongkong & Shanghai Bank
and he gold and diamond houses that with HongShang feed the
black market with invisible forms of payment.

In the following pages we will concentrate on the distribution
side of Dope, Incorporated's business cycle. We will first enter
the Canadian board rooms where the Keswicks, the Inchcapes
and their representatives brush shoulders with the wholesalers of
the drug trade — the Zionist Hofjuden middlemen — whose
assigned task is to ensure swift and secure delivery of that "most
valuable source of revenue" to Britain's retail distributors: the
mob. The Bronfman family of Canada is our leading case, since
they are the top middlemen for the U.S. market which, in turn, is
the richest in the world.

Beneath the respectable veneer of the Bronfmans' corporate
financial empire we will uncover Dope, Incorporated subsidi¬
aries that control the criminal underworld of North America. We
will look closely at Meyer Lansky, the Marcello family, and other

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"Mafia" figures and discover that like China's Green Gang, the
mob is a secret army, a fifth column controlled by Britain against
the United States.

We will trace the drug money to the gambling casinos and other
"legitimate" enterprises that are the syndicate’s indispensable
storefront cover for the drug trade. From these respectable
enterprises we will trace the drug money into the halls of the
state assemblies, city councils, congressional offices, and into
the pockets of America's contemporary Benedict Arnolds and
Aaron Burrs, among whom we will find Edward Kennedy, Jacob
Javits, Henry "Scoop" Jackson, and other leading lights of the
Zionist Lobby. We will find tainted heroin money being funneled
into Zionist organizations and from Zionist fronts back into
political machines for the dual puipose of buying protection
for the drug trade and shaping U.S. policy.

We will then take a grand tour through the Anglo-Dutch
offshore banking centers, watching money being laundered
through Basel, Liechtenstein, Tel Aviv, and the Bahamas; tracing
it carefully as it changes ownership from the mob, to the
Bronfmans, to British banks, to the Israeli Mossad — finally
ending up in dummy corporations to finance international
terrorism and a privately owned worldwide assassination
bureau.

By the time we finish, the reader will have a view of organized
crime that tears to shreds all the fairy tales of the drugstores
novels and Grade-B Hollywood productions. The image of
gangsters and thieves lurking in the dark underworld will
dissipate before the fact that we arc dealing with the most highly
integrated, top-down political machinery in the world — one that
enjoys the logistical support of a $200 billion per annum inter¬
national cartel and the "protection" of every political entity
Britain has created through these vast "invisible earnings."

The cutouts

The police investigator has a problem in trying to track down
the source of the drug trade: he invariably proceeds from the

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265

bottom up and gets lost along the way long before he reaches the
level of command that counts. Every year, local police arrest
thousands of street corner and schoolyard pushers, yet it is a rare
occasion when any of these arrests leads to the arrest of higher
up syndicate figures who ply the street trade in the first place.
And these local syndicate warlords are themselves usually
several steps removed from the "Mr. Bigs."

As Part II of this report demonstrated, at the top, British
banking — through HongShang — controls the production and
wholesaling side of Dope, Incorporated. This "outfront" activity
in the Far East is protected by the legal technicality that the area
is off-limits to U.S. investigative agencies. (As one experienced
U.S. foreign service officer put it, "It would be easier for a white
Anglo-Saxon Protestant to penetrate the Politburo of the Chinese
Communist Party than it would be to gain access to the Hong
Kong or Swiss bank accounts of the drug traders.") At the retail,
distribution end. there is no parallel way of directly linking the
British oligarchy to the drug traffic — at least not with the
ordinary tools of the police trade.

One of the ABCs of any covert operation is the time-tested
practice of securing middlemen — or, to use the professional
expression, "cutouts" — that effectively conceal the identities of
the stage managers who run the show from behind the lace and
velvet curtains. From the top all the way down to the street level.
Dope, Incorporated is run through layer upon layer of such
cutouts.

Even in China, where the British Crown brazenly pursued its
opium policy, it operated through the corrupted Soong family
which carried out the day-to-day business operations for Jardine
Matheson.

In the West, the prime cutout for Dope, Incorporated is the
Zionist Lobby.

This cutout begins at the top with the cohesive grouping of
Hofjuden ("Court Jews") who serve the British monarchy as
loyal, wholly owned servants. These families, whom we will meet
by name, have a centuries-long tradition of attaching themselves
to the predominant noble houses of Europe, providing
indispensable services as tax-farmers and errand boys for the

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types of missions that the aristocrats would prefer to plan but not
get caught in carrying out.

Many of these Hofjuden families migrated from Amsterdam to
Britain after the "Glorious Revolution" (1688), which brought the
Dutch House of Orange onto the British throne in alliance with
the most bucolic, feudalist landed gentry of the Isles. That Anglo-
Dutch merger of the late 17th century turned Britain into the
most powerful center of the European oligarchical faction — a
status it has maintained for three centuries. For these Hofjuden
families, the relocation to Britain marked no shift in allegiance;
they have functioned as servants for the oligarchical system, not
for specific houses. Several of the Hofjuden families who
converged on London during the 17th and 18th centuries had
served the Genoese bankers in their takeover of Holland, had
participated in the Dutch East India Company's first expeditions
in opium trade, and had collaborated over the centuries with the
British Jesuits against European humanist forces.

The Hofjuden should not be confused with the Jewish people. In
much the same way that one would not condemn an entire nation
for the crimes committed by its most deranged citizens, one
cannot condemn the entire Jewish people for the centuries of
crime committed by the Hofjuden. The only relationship the
Hofjuden have had to Jewry is that of persecutors and tormentors.
As the clandestine operations bureau for the oligarchy, they
quickly learned that they could augment their capabilities
tremendously by subjecting Jews to waves of persecutions and
then recruiting terrorized Jews into Zionist organizations that
had as their ostensible aim the "survival" of Jewry! In street
parlance, the Hofjuden have run a six-century-long protection-
extortion racket against the Jewish people — to the overall effect
of building up a sizable "Zionist" network at the disposal of
British Secret Intelligence. This traditional relationship to Jewry
was carried to its lawful conclusion in the 20th century when the
Rothschilds, Warburgs, Oppenheimers, Schroeders, and other
Hofjuden became the leading financial backers of Adolf Hitler.

One of the greatest benefits that the Hofjuden gained by their
complicity in Hitler's genocide of the East European population
was that they could henceforth hide behind the memory of the

ORGANIZED CRIME

267

awesome fate of millions of Jews and conduct the filthiest sorts of
operations — from drug-running to terrorism to genocide against
Arab and related populations — without being exposed for these
crimes against humanity. Whenever any critic attempted to
expose these crimes, he was quickly assaulted as a "Nazi," a
"fascist," or an "anti-Semite."

It is neither unrelated nor coincidental that these Zionist
Hofjuden were delegated the role of cutouts between the inner
circles of the British nobility and the filthiest gutters of organized
crime. Even within the Hofjuden, we encounter two levels: one is
the centuries-old families (the Hofjuden "elite") who rub
shoulders with and are intermarried with the nobility; and the
second, the "initiates" — "chosen" by the Hoijuden elite to be the
drug-runners, the bootleggers, the murderers, and extortionists
- who themselves hope that by slavishly serving the British oli¬
garchy they will be placed among the ranks of the Zionist
"respectables."

Within the first category, we find such "respectable houses"
as these:

The Montefiores trace their origin as "special operations"

experts for the European oligarchy to the 13th century in Spain,
when they ran errands as tax farmers and Inquisitors for their
masters, the Genoese. The Montefiores later moved to Holland to
help found the Dutch East India Company and the Bank of
Holland. After the Stuart Restoration of the mid-17th century, the
Montefiores moved to England where they helped establish the
Bank of England and the British East India Company. Under Sir
Moses Montefiore, the family collaborated with Lord Palmerston
and Prime Minister Disraeli in the founding of the present-day
Zionist "movement."

The Goldsmids and Mocattas have been the leading bullion
merchants for the royal family of England since the Stuart
Restoration, predating the founding of the Bank of England. As
we have seen, both families conduct a significant portion of the
black marketeering in precious metals for the Hong Kong drug
traffic.

The Oppenheimers control a large portion of the diamond and
gold mining in South Africa and are interlocked with the

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HongShang Bank to provide yet another means of exchange for
drug transactions.

The Canadian de Hirsch family bankrolled much of the Jewish
migration from Eastern Europe to Canada and is still a bank-
roller of Zionist organizations.

The Sassoons were the first Hofjuden family to concentrate
their resources primarily in opium production. Known as the
"Rothschilds of the East," they settled in India at the beginning
of the 18th century. The Sassoons relocated in 1949 to the Carib¬
bean where they established themselves on the ground floor of
casino gambling and unregulated offshore banking.

The Rothschilds began their fortune in Hesse-Cassel, Germany
by supplying Hessian mercenaries to the Hanoverian King
George III of Britain against the American colonies. They are
"johnny-come-latelys" to the Hofjuden circle, having only
seriously gained a place in the oligarchical court with the Treaty
of Vienna in 1815. From that point, however, the Rothschilds have
expended considerable resources toward the subversion of the
American republic; they maintain an "investment" presence in
Dope, Incorporated.

Immediately below the Hofjuden elite are those "initiate"
families selected and sponsored to run the criminal underworld
and its "legitimate" front organizations. Into this category falls
the powerful Bronfman family of Canada, the Hong Kong of
North America. By all accounts one of the richest families in the
world, the Bronfmans are a sterling example of a family hand¬
picked and raised out of the gutter to become some of the best
paid crooks in the world. A Bronfman illegal loan of $350,000 to
the Campaign to Re-Elect Hugh Carey as Governor of New York
recently caused a public outcry, but as the story we now tell
shows, the Bronfmans themselves are owned and operated by the
British banking elite of Dope, Incorporated.

The Bronfman Gang

The Bronfman family is best known to Americans through its
ownership of Seagram, the biggest liquor company in North
America. The family's holdings stretch from whiskey, banking,
mining, real estate, and — although somewhat less publicized —
narcotics. Today they are regarded as respectable and out¬
standing "philanthropists" whose name is attached to everything
important in Canada — and Israel — be it government, business,
or "cultural" affairs.

This was not always the public profile of the Bronfman family.
Less than 50 years ago, they were known to be the biggest boot-
loggers in North America and were referred to by the less
prestigious title "the Bronfman gang."

The Bronfmans have always been beholden to the Hofjuden
elite. The first member of the family to come to North America
was Yechiel Bronfman, a grist mill owner from Bessarabia, Ro¬
mania, who later anglicized his name to Ekiel. Yechiel emi¬
grated to Canada in 1889 under the sponsorship of the Moses
Montefiore Jewish Colonialization Committee. (1)

This enterprise had been initiated at an 1872 meeting between

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Baron Maurice de Hirsch, Baron Alfred de Rothschild, and other
Zionists that established a Jewish Colonialization Association to
bring selected Russian and Eastern European Jews to agri¬
cultural settlements ("kibbutzim") in the Canadian provinces of
Manitoba and Saskatchewan. (2) The same period marked the
transfer of the Warburg, Kuhn, Loeb, and related Our Crowd
migration from Germany and Britain into lower Manhattan. In
1912 William Sebag Montefiore himself arrived in Montreal
where he spent the remainder of his life (d. 1950). Lord Harold
Sebag Montefiore, current head of the Jerusalem Foundation
(the Zionist wing of the Most Venerable Order of St. John of Jeru¬
salem) was sent to Canada for his early education. In the same
period, Baron de Hirsch established the De Hirsch Foundation in
Canada as the umbrella for all Canadian Jewish "philanthropic"
activities and the Montefiores created a club (named after the
family) to service the resident Zionist elites. The Rothschilds,
too, planted a branch of their family on Canadian soil.

Meanwhile, in Saskatchewan, the Bronfman family found little
interest in eking a living out of the plains of midwestem Canada.
The strenuously Orthodox Jewish family first turned to selling
wood, then to horse trading, and then most successfully to the
hotel business (and prostitution). (3)

In Yiddish Bronfman means "liquorman," and the hotel
business put the Bronfmans in a good position to take advantage
of the 1915 advent of Canadian prohibition. Bronfman hotels
became "boozeriums." Prohibition — enacted on orders from the
Privy Council as the prelude to the 1920s U.S. Prohibition and
birth of organized crime — catapulted the Bronfmans into the
multimillionaire bracket and a status as the untouchable
kingpins of crime in North America.

During Canada's four dry years from 1915 to 1919, the Bronfmans
established their contacts with U.S. criminal figures for illegally
importing liquor into Canada. In 1916, the Bronfmans established
their first link with the opium trade proper. Samuel and Abe
Bronfman, two of Ekiel's four sons, collaborated with the
Hudson's Bay Company — in which the Keswick family of
Jardine Matheson had controlling interest — to buy the Canadian
Pure Drug Company. In this way the Bronfmans rushed into the

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271

loophole in the War Measures Act that permitted the distribution
by pharmacists of alcohol for "medicinal" purposes.

When prohibition in Canada ended in 1919 and Prohibition in the
United States began, the Bronfmans simply turned from whiskey
importing to whiskey exporting. After it was all over, in May 1936
the Bronfmans agreed to pay $1.5 million to settle their account
with the U.S. Treasury; the sum amounted to an admission that
half the liquor that came into the United States during Prohi¬
bition was from the "liquormans." (4)

The "Seagram Chickencock" the family poured across the
border was pure poison — a mixture of pure alcohol, sulfuric
acid, caramel, water, and aged rye whiskey that paralyzed its
victim. Between 1920 and 1930, 34,000 Americans died from
alcoholpoisoning.

Their control of liquor flow into Prohibition USA gave the
Bronfmans literally life-and-death control over American crime.
Refusing to play ball with the Bronfman gang usually spelled
death, and independently minded gang bosses were often known
to be executed by their lieutenants on the Bronfmans' behalf. One
of the buyers best liked by the gang was New York City beer
baron Arthur Flegenheimer, a.k.a. Dutch Schultz, who suc¬
ceeded in wiping out his competition including the notorious
killer Legs Diamond. Schultz himself was later rubbed out when
he took it into his head to murder the reforming New York
District Attorney Thomas Dewey. (We will meet up with Mr.
Dewey later in regard to the Mary Carter Paint Company.) (5)

In the first years of Prohibition, Ekiel's lour boys ran all boot¬
legging from the prairie states of Canada to major distribution
sites south like Chicago. To secure the shipment lines, Harry set
up a dummy firm, Transcanada Transport Company. Trans-
canada was a protective cover for the Canadian Pacific Railway
owned by respectable gentlemen back in London, which ran the
whiskey across the border. (6) The Bronfmans also bought up
stretches of barren farmland along the border and even built an
underground pipeline to pump their "chickencock" into the
United States.

During these early years, the Bronfmans were scarcely under
the protective wing of their Zionist sponsors. Thus, for example.

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in 1932 Bronfman brother-in-law Paul Matoff was executed
gangland-style by the Chicago mob in a dispute over profit
splitting. A scandal ensued, public hearings were convened, and
the Bronfman crimes came spilling out into the light of day. The
Bronfmans received a mild reprimand from the Canadian
government and relocated their operations to Montreal.

1922 also marks the year that the Bronfmans procured their
own distillery, hauled with workmen included from Kentucky to
Montreal.

Since 1920 the Bronfmans had been importing British whiskey
from the Distillery Company of London (DCL), which controlled
more than half the world market in scotch whiskey. Owned by the
higher echelons of the British nobility including Field Marshal
Haig, Lord Dewar, Lord Woolavington, and others, the dispen¬
sation of distribution rights was a decision made by HM the
King. In 1926, upon the request of Samuel Bronfman, the DCL
agreed to go 50-50 in the Bronfmans' distillery and the Distillery
Corporation Limited was formed as a holding company with
Bronfman and Seagram distilleries. Headquarters were estab¬
lished at the Bronfmans' corporate castle in Montreal, but it was
the Distillery Company of London's William Ross who was
installed as president with Sam Bronfman as vice-president.
The British elite had made a decision to go with the Bronfman
option.

Despite the massive infusion of capital and the newly gained
legitimacy the link-up with DCL afforded them, the smell of
Bronfman smuggling both into and out of Canada and their
wholesale bribery of Canadian customs a la Hong Kong had
gotten too strong. In 1928 the Royal Commission on Customs
recommended the immediate prosecution of Harry Bronfman on
charges of attempted bribery. Nothing happened, but shortly
thereafter the Bronfmans created the Atlas Shipping Company
and moved their smuggling operations to the French islands of
St. Pierre and Miquelon, 15 miles off the Newfoundland coast.
With licenses in Bermuda, Saint John, New Brunswick, and Bel¬
ize, British Honduras, the Atlas Shipping Company was one of the
first ties laid down in the dirty money-drug underground railway
between Canada and the Caribbean. (7)

ORGANIZED CRIME

273

A little ditty popular during the time indicates the amusement
with which the British viewed the entire operation:

Four and twenty Yanks
Feeling very dry.

Went across the border
To get a drink of rye.
When the rye was opened.
The Yanks began to sing:
"God bless America,

But God save the King."

Organized crime comes of age

With Prohibition, crime became a bigtime business. It was no
longer based on small-scale prostitution, loan sharking, or petty
protection rackets. Now it was centralized around the marketing
of one precious and outlawed commodity whose supply was
controlled from London and from the British colony of Canada.

Crime was reorganized from top to bottom into an integrated
wholesale and retail distribution chain with well-defined
marketing districts, quotas, and uniform pricing. Crime became
syndicated.

Hundreds of movies spewed out of Hollywood about the
"Roaring Twenties" have glamorized the truth: with Prohibi¬
tion, Britain — through its Bronfman Gang cutout — had created
a nationally syndicated crime cancer. Within a decade of the
Roaring Twenties, the Bronfman syndicate would be peddling
heroin, cocaine, and every other available poisonous drug
through the same wholesaling, transporting, and retailing
system that bootlegged booze.

Bronfman's counterpart in the United States was one Arnold
Rothstein. Just as Bronfman made it into the bigtime under the
auspices of the Hofjuden elite, so Arnie Rothstein was sponsored
by Our Crowd Zionist investment bankers who arrived in
New York as the Montefiores were setting up business in Canada.

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DOPE, INC.

Arnold Rothstein — the godfather of organized crime — was the
son of a wealthy Our Crowd dry goods merchant.

At the turn of the century, the Russell Sage Foundation had
issued a well-publicized field study of loan sharking in New York
City. (8) The report's wide publicity resulted in the bankrupting,
jailing, or takeover of the petty gangsters by Rothstein, who
emerged as a powerful Tammany Hall figure with a fabled loan
sharking business estimated at several million dollars.

Regionwide combines were formed up and down the East Coast
for smooth distribution. The Reinfeld Syndicate — named after
the Newark, New Jersey bootlegger and accused murderer
Joseph Reinfeld — functioned as the middleman between the
British liquor distilleries and the "Rum Rows" of Boston and
New York. Its controlling shareholders were the lour Bronfman

brothers, Allan, Sam, Edgar, and Charles. The U.S. leg was
handled by Reinfeld and Abner "Longie" Zwillman, later the
boss of Atlantic City, and Rothstein’s gangs in New York. (9)

In 1927, the Big Seven combine consolidated the entire East

Coast distribution system. Its organizer was John Torrio — a

dapper little gentleman who without benefit of family, racket, or
turf had gained notoriety for eliminating any local crime bosses

who stood in the way of national syndication. Torrio was a

Bronfman man who had murdered his own uncle to prove it.

Brought into Chicago in 1910 by his uncle, racketeer "Big Jim"
Colosimo, Torrio smelled the wind on the eve of Prohibition and
demanded that his uncle start making the right contacts to get
into the lucrative business of bootlegging. When "Big Jim"

refused, Torrio had him murdered and took over the Chicago

mob as the distribution point for the Bronfman liquor. (10)

In 1925, Torrio suddenly left Chicago heading first for Havana
and then landing in Italy. Returning to the United States in 1927
after he miraculously "escaped" Mussolini's purges of the
Mafia, Torrio came back with one goal: to build a nationally)
organized crime syndicate.

While the mad killers and punks like Dutch Schultz, Legs
Diamond, and A1 Capone made the headlines every day and
provided good material for gangster movies, John Torrio quietly
continued the work that Arnold Rothstein (assassinated in 1928)

ORGANIZED CRIME

275

had begun, now with the aid of Rothstein's successor Meyer
Lansky. Torrio could do what Lansky and the Bronfmans were
prohibited from doing for reasons of ethnicity: discipline the
scores of family local crime chieftains and "moustache petes"
into one centralized business that could penetrate every sector of
the economy. Known as the "assassin who never carries a gun,"
Torrio presented himself as the elder statesman of organized
crime and commanded respect from the Mafia locals. "Coopera¬
tion is good for business" was his slogan.

The Big Seven had been Torrio's first step. The cooperative of
East Coast bootleggers controlled from the top down to the local
levels all prices, membership, centralized distribution points,
corruption, and protection.

By 1928 Torrio was able to call a Cleveland meeting to establish
a nationwide crime syndicate. (11) The gathering was unique in
that it had succeeded in bringing together into one room all the
crime bosses of every major organized city. There were three
items on the agenda. First, how to use the huge profits of Prohibi¬
tion and invest them in legitimate business that would permit a
steadily increasing take for the syndicate. Second, how to deal
with the Italian question. The ritual vendetta murders of the
Mafioso families were good for the newspapers, said Torrio, but
bad for business. Immediately after the meeting the Castellam-
marese gang wars broke out in New York as the test case for
Torrio's syndicate. Under the auspices of Lansky and Torrio,

Lucky Luciano succeeded in wiping out all recalcitrant god¬
fathers. During the last night of the war — the infamous "Night of
the Sicilian Vespers" — over 40 people were gunned down. (12)

With cartelization came the need for more long-lasting regu¬
lation — gangland style. In the early 1930s Murder, Incorporated
was formed as a regulatory commission of sorts to police any
overzealous "free enterprise" advocates who might try to buck
the syndicate. A special assassination bureau was set up by

Meyer Lansky and Benjamin "Bugs" Siegel. The "Bugs and
Meyer Gang" had been distinguished by the fact that they owed
allegiance to no one (except maybe Arnold Rothstein); they had
originally been used to protect Bronfman liquor shipments
across the border against "freelance" hijackers. (13)

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DOPE, INC.

By 1932 Torrio was strong enough to pull together another
meeting of the syndicate, this time in Atlantic City, where a
National Commission — the board of directors of organized
crime — was officially formed. Aside from the leading Italian
mafiosi who had survived the transition, Meyer Lansky, now
regarded as the financial and enforcement wizard of the syndi¬
cate, and Atlantic City's Zwillman were in attendance as honored
guests.

Thus, for the British, Prohibition was a roaring success. What
had begun as a three-way contract between Britain (the
supplier), Bronfman (the cutout), and Rothstein (the distributor)
had become within the space of a decade a nationally organized
crime syndicate — a private, secret army under British banking
and political control.

The Rothstein-Hong Kong connection

To pick up the story of the modern-day Dope, Incorporated, let
us return to Cleveland and John Torrio's first 1928 meeting of the
syndicate. The third item on the agenda was what to do after
Prohibition. The commodity, Torrio proposed, that would replace
liquor as the black-market, big-profit taker was narcotics.

When Prohibition began in 1920 Arnold Rothstein had person¬
ally gone to Great Britain to establish the liquor pipeline with the
British distilleries. Less known but more important is that at the
same time he had dispatched his underling Jacob "Yasha"
Katzenberg to Shanghai to begin negotiations for a dope pipeline
from the Far East into the East Coast of the United States. (14)
(The West Coast had been sewn up in the previous century with a
pipeline from Shanghai straight into the Pacific Chinese coolie
communities.)

It was projected that the same networks established to bootleg
liquor could just as easily smuggle and retail narcotics. By 1926,
U.S. narcotics agent-on-the-scene in the Far East, Ralph Oyler,
wrote back to his boss Levi Nutt, chief of the U.S. Narcotics
Division, that the opium market had expanded so tremendously
that Britain was "even taking shipments of crude opium from the

ORGANIZED CRIME

277

Near East to add to her gigantic supply of Asian opium" in order
to meet market demand. The traditional opium families of Kes¬
wick, Sassoon, and Inchcape were preparing for the future. (15)

One year after Oyler's report, the 1927 Shanghai massacre put
an end to all challenges to the rule of opium. The Shanghai
uprising had been an attempt by the nationalist factions within
the Kuomintang and Communist Party to destroy the opium
dealers, such as the Soong family, who had seized control over

the government and had carved up China into drug-running "war¬
lord" satrapies. The massacre was carried out by the Green
Gang Syndicate, acting on orders and funding from the Extra¬
territorial International Settlements on Shanghai headed by Lord
William Johnston Keswick. The British enclave harbored the
Green Gang criminals at the time of the massacre, and the
British-dominated Municipal Council (headed again by Lord
Keswick) turned over trade union leaders and others to Green
Gang criminals who executed them. (16) Had the Shanghai
massacre occurred during the previous century, it would have
been known as the Third Opium War; the consequence of the

slaughter was yet another dramatic increase in British opium
control over China.

The two principal Green Gang leaders involved in the
massacre were Tu Yueh-sheng, "whose factories flooded the
American market with narcotics" after the coup, and Huang

Chin-jung, who was Arnold Rothstein's contact man. British-dom¬
inated post-1927 Shanghai was to become for the next 14 years the
premier drug depot for the world.

This shift East in the production of the opium cycle has been
documented by Jonathan Marshall in the Bulletin of Concerned
Asian Scholars:

By the late 1920s, China was a net exporter of opium, and
within a few years it replaced the Near East as the world's
opium smuggling capital. By 1931, China produced seven-

eighths of the world's narcotics. Chinese opium flooded the
world markets through Hong Kong, Shanghai and Macao.

By the mid-1980s, Chinese heroin dominated the
American market.

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DOPE, INC.

As documented by Marshall, Lord Keswick and the other
controllers of the opium trade imposed the Green Gang dope
merchants in power in China, making the production and
distribution of opium the backbone of the Chinese economy. The
consequences were predictable: unparalleled genocide against

the Chinese population.

In early July, 1932, T.V. Soong, who had resigned (as
Finance Minister — ed.) the month before after failing to
raise enough money for the communist suppression cam¬

paign, hinted that he would return to office if a new source
of revenue — such as opium — could be found. He picked up
the support of the influential H.G.W. Woodhead, who, prob¬
ably reflecting the sentiment of the British business com¬
munity (i.e., Keswick, the HongShang, and Standard and
Chartered — ed.) argued that only such a monopoly could
solve China's financial crisis. An opium monopoly was a
small price to pay to protect the stability of China's busi¬
ness climate. . ..

(Due to the forced cultivation of opium — ed.) millions of
acres of land were taken out of food production. In food-
short China, this reduced the margin of peasant survival

. . . the most notorious case of famine brought on by over¬
cultivation of opium occurred in Shaanxi province between

1928 and 1933. It took as many as six million lives in four
provinces, wiping out perhaps a third of the entire popula¬
tion of Shaanxi province. (17)

Let us now stand back and review — in light of this history —
the jigsaw puzzle pieces that fall into place with Yasha
Katzenberg's trip to Shanghai and the sealing of an opium pact.

First, Arnold Rothstein, Yasha Katzenberg's employer, was a

product of the Rothschild "dry goods" empire that included the

Seligman, Wannamaker, and Gimbel families. During Prohibi¬
tion, according to the Bronfmans' own testimony, Rothstein,

Meyer Lansky, and Lucky Luciano were the Bronfmans' main

distributors. As Prohibition came to a close Bronfman asso¬
ciates traveled to Shanghai and Hong Kong to streamline and

ORGANIZED CRIME

279

expand the drug trade into the United States, negotiating with the
foremost Chinese drug-runners who were not only encouraged
but pressured by the British "business community" to pull
together an opium cartel.

The man dictating the opium policy to China in this period, the
man who sired the T.V. Soong opium monopoly, was Sir William
Johnston Keswick of Jardine Matheson and the Hongkong and
Shanghai Bank. From the period of the Shanghai massacre to
1942 when he was interned by the Japanese, Keswick directed the
international Settlements of Shanghai — the period of gross
expansion of Shanghai heroin into the United States. The same
Sie William Keswick was until very recently the director of the
Hudson's Bay Company of Canada, the same company, it will be
recalled, that collaborated with Sam and Abe in 1916 to found the
Pure Drug Company for illegal distribution of whiskey into
Canada.

Working for Hudson's Bay along with Keswick is Sir Eric
Drake, who not only sits on the board of several Bronfman-run
banks and companies, but is also an employee of the Inchcape
family and presently the deputy chairman of the Inchcapes'

Peninsular & Orient Steamship Company. The current chairman
of the board is the son of the Lord Inchcape who in 1923 called for
the expansion of "that most valuable source of revenue" — the
opium rade.

Sie Eric Drake is also a member of the board of Canadian
Pacific, which plays a most vital role in the transshipment of
drugs through Canada into the United States, just as they did with
alcohol during the Prohibition. Along with Lord Trevelyan, who
heads up the HongShang's "gold-for-dope" exchange from his
position at the British Bank of the Middle East, and Lord
Inchcape, Sir Eric Drake sits on the board of British Petroleum,
as does Sir William Johnston Keswick.

Sitting on the board of the Bank of Montreal along with Charles
Bronfman and two Seagram directors are J. Bartlett Morgan,

William Arbuckle, and F.S. Burbridge, who in turn sit on the
boards of Hudson's Bay, Canadian Pacific, and a host of other
banks and corporations in which the drug families of the
HonkShang nexus play a policy-making role.

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We are not charging "guilt by association" but rather making
note of the fact that the series of "legitimate" enterprises the
Bronfmans moved into toward the close of Prohibition are indis¬
tinguishable from and intermeshed with companies controlled by
Keswick, Inchcape, and other leading opium traders. During
the same period, these gentlemen openly supervised the drug
trade into the United States. This association not only continues
to this day but is the mainstay of the Bronfman empire.

Going legit ain't necessarily kosher

With the repeal of Prohibition and with the Shanghai opium
deal in operation, the Bronfmans, like so many of their partners
across the border, "went legit." Organized crime sunk its mil¬
lions in legitimate businesses that both acted as cover for illegal
activities and set up the laundry networks for dirty money. The new
phase of respectability signaled that the most successful bigtime
whiskey bootleggers were switching to bigtime narcotics.

In the early days, the Bronfmans had to run all the risks of the
smuggler's profession. They had to dodge the law, stay one step
ahead of the desperadoes on the other side of the border, and
whenever things went wrong, face the humiliation of public expo¬
sure and scandal. As a result, the family acquired a considerable
reputation.

Looking expectantly toward the fast increase in drug trade in
America, the British could not afford to leave their leading cutout
in such an exposed and precarious position. Nor could they sim¬
ply dispose of the Bronfmans after Prohibition. The family had
become irreplaceable due to its in-depth control over the syndi¬
cate. Yet, they would be a liability if they continued to work as
openly with their distributors in narcotics trafficking as they did
running Prohibition.

The problem was resolved by bringing the Bronfmans into the
lower rungs of the Hofjuden caste. Almost overnight, the Roth¬
schilds, Montefiores, de Hirsches, et al. took "Mr. Sam," the
crime czar of North America, and transformed him into a rising
star of the Canadian Zionist movement.

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281

* In 1934, Mr. Sam was given his first "respectable post" as
chairman of the National Jewish People's Relief Committee
(Canada).

* By 1939 he had been appointed head of Baron de Hirsch's Jew¬
ish Colonization Association, the same Association that had
brought Yechiel to Canada.

* In the same year, the Canadian Pacific Corporation invited
Mr. Sam to establish a new refugee organization for Eastern
European Jews.

* Within five years, the prince of crime was transformed by the
good grace of His Majesty's oligarchists into a Zionist "philan¬
thropist." One post followed after another. He became head of

the Canadian Jewish Committee, replacing Lyon Cohen, the son
of Lazarus Cohen, the founder of the Jewish Colonialization Asso¬
ciation and the official agent of the de Hirsch family interests.
After World War II, Mr. Sam established the National Confer¬
ence of Israeli and Jewish Rehabilitation, using his considerable
smuggling skills to run guns to the Haganah.

Similar posts were awarded to the other Bronfmans. Allan
Bronfman was named president of the Zionist Organization of
Canada, a member of the board of trustees of the Federation of
Jewish Philanthropists and of the national council of the Cana¬
dian Jewish Congress. Abe Bronfman was posted to the Joint Dis¬
tribution Committee and also to the national council of the Cana¬
dian Jewish Congress. _

Finally, in 1969 the Bronfmans were given the highest reward
issued by Her Majesty. Sam was made a Knight of Grace of the
Most Venerable Order of St. John of Jerusalem — Her Majesty's
official chivalric order. His brother Allan and his son Charles
were appointed to the highest rank, Knight of Justice of the Or¬
der. These appointments are emphatically not ceremonial, but
are only bestowed on those who have carried out the most
dangerous and fruitful missions for the British Crown.

The Bronfmans' time had truly come. Sam’s children were wel¬
comed into the Hofjuden elite by intermarriage. Minda married
Baron Alain de Gunzberg, himself an extension of the Rothschild
family tree. De Gunzberg sits on the board of Seagram, is manag¬
ing director of the Banque Louis Dreyfuss, and controls the Selig-

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man-Louis Hirsch investment house which has close Rothschild
ties. Edgar Bronfman's first marriage was to Ann Loeb, bringing
him instantly into a command position within the Wall Street
house of Loeb, Rhoades, and Co. While taking over the Seagram
main branch in New York, Edgar's marriage clinched the tie to
Our Crowd that had begun during Prohibition. His second mar¬
riage, to Lady Caroline Townshend, as we have seen, was
unsuccessful. Phyllis Bronfman married Jean Lambert of the
Belgian banking and mining interests.

Yet, despite their mountains of wealth, despite their hard-won
entry into the realms of good breeding, it would be a mistake to
think the Bronfmans were a power in their own right. When it
comes to the question of control, they are treated as if the money
were not their own.

Take, for example, the case of "Trizec," the holding company
through which the Bronfman brothers ostensibly run their
various corporations, including Seagram. Since it was formed in
1960, the Bronfmans have never held a majority position within
Trizec! Trizec is run by Eagle Star Ltd. of London, a holding
company whose directors have been described by one author as

"the most notable of the British aristocrats." (18) Evelyn de
Rothschild, the earls and dukes who control Lloyds of London and
other banking and insurance firms, and leading lights of British
intelligence such as Sir Kenneth Strong and Sir Kenneth Keith all
converge on the board of Eagle Star. (See Part II, Section 8.) This
extraordinary company in turn owns English Property Corp. Ltd.

— whose principal individual shareholder Laurie Marsh has
gained notoriety in Britain as the "Prince of Pornography"for
his ownership of the majority of pornographic movie theaters,
massage parlors, and "red light district" real estate in London.
(19) English Property Corp. Ltd. owns majority holdings in

Trizec.

Neither are the brains behind the Bronfman empire situated
between the ears of members of the Bronfman family. The

source lies elsewhere — in the family's law firm of Phillips,
Bloomfield. Vineberg, and Goodman (now Phillips and
Vineberg).

The personage of family arbiter and attorney Lazarus Phillips,

ORGANIZED CRIME

283

in particular, was a constant sore to Mr. Sam. Born into the upper
crust of the Zionist elite, Lazarus Phillips succeeded in gaining
all the yeckus — publicly recognized respect — that Mr. Sam
could never seem to win. Phillips was a holder of the Order of the
British Empire, a senator in the Canadian Congress, a member
of the board of directors of the Royal Bank of Canada, invited into
the exclusive Mount Royal Club as a member, and was a power-
broker for the Liberal Party.

But without Phillips the Bronfman family empire could not
survive. It is likely that through him the Bronfmans received the
input of cash that allowed them to proceed steadily from boot¬
legging to the legitimate bigtime. Certainly it was Phillips who
unfroze enough funds under export control from the grip of the
Bank of Canada to finance Seagram's wartime expansion into the
United States. As the final judge in all family matters — legal and
otherwise — Phillips has sat on the board of Seagram since 1940
and on every other company and philanthropic front nominally
run by Mr. Sam. He is still the codirector of Trizec and the other
major Bronfman holding company Edper (named after Edgar
and Peter Bronfman). Phillips is also the expert who managed to
get the Bronfmans off every legal hook they ever got caught
on. (20)

Philip F. Vineberg is part of the Vineberg family of Abraham
Moses Vineberg, chairman of the Moses Vineberg Investments
firm and the de Hirsch Institute. Cochairman of all the Bronfman
holding companies, Vineberg runs the Canadian Israeli Bond
Drives and the Canadian Council of Christians and Jews. He is
also a member of the Hofjuden elite's Montefiore Club.

Major Louis Mortimer Bloomfield, also of the firm Phillips,

Vineberg, and Bloomfield, is however, without a doubt the most
colorful of the Bronfman brains-behind-the-scenes and this may
explain why his name was left out of Peter Newman's 1978 book
The Bronfman Dynasty (rumored to have been commissioned
by the Bronfmans themselves). In addition to his position up to
the late 1960s as a Bronfman family lawyer, Bloomfield remains
a close banking associate. The Major's Zionist activities are
numerous: he is involved in a nest of corporations including the
Israeli Continental Company, he is chairman of the Canadian

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Histadrut Campaign, and a former president of the Israeli Mari¬
time League. He also holds the post of Consul-General in Liberia,
under whose flag vast quantities of opium and narcotics are
shipped. He is a high-ranking member of the Most Venerable
Order of St. John of Jerusalem and runs its subsidiary Canadian
Red Cross Ambulance Corporation.

Major Bloomfield also runs Britain's International Assassi¬
nation Bureau, an entity we will soon examine in detail.

Are they really clean?

The answer, of course, is no. Since the days they sent their
"chickencock" across the border to their claim as the world's
finest whiskey blenders, the Bronfmans' ties to North America's
crime syndicate have never been broken but merely undergone
corporate reorganization. In Section 3 on the Bronfman company
of Permindex, we will analyze their criminal activities in length
At this point a few examples will suffice.

Take the case of Bronfman family intimate Murray Koffler. A
leader of the Jerusalem Foundation in Canada, Koffler was the

subject of a major scandal in 1976 when his business associates,
Starkman stores, were busted by Canadian police after its

pharmacists were caught manufacturing illegal amphetamines
and funneling them into the black market. (21)

Charles Bronfman's sister Phyllis Lambert was the subject of
a simultaneous scandal for her involvement in Heritage Canada,
a government funded "social service" program that got caught
conduiting drugs onto Canadian college campuses. (22)

In 1975 the Bronfmans again made the front pages when Edgar
Bronfman's eldest son, Samuel II, was reported kidnapped. The
case revealed the kidnapper to be Sam II's homosexual lover.

When the police found them, Sam's kidnappers pleaded that the

Bronfman youth had blackmailed them into the hoax as a way of
extorting money from his father. The jury agreed; the two
abductors were declared innocent of kidnapping, but found guilty
of the lesser charge of extortion. The press also aired the kid-

ORGANIZED CRIME

285

flappers' pleas that their lives were now in danger for having
sung about Sam II.

Since he took over the reins of Seagram's New York branch in
the 1950s, Sam II’s father, Edgar, has built the Seagram
distilleries network into a multinational global empire. The
Bronfmans, for example, have entered into a most profitable
business partnership with the Cuban rum Bacardi family. After
Fidel Castro took over the island in 1959, the Bacardis switched
their base of operations to Puerto Rico and Miami, taking along
with them a small army of anti-Castro Cuban exiles. The
Bacardis, headed by Manuel Cutilla Bacardi, have been pin¬
pointed by law enforcement agencies as the funders and political
controllers of entire networks of Cuban exiles. The "gusanos," as
they are called, are not only involved in terrorism (Orlando
Bosch's September 1976 bombing of a Cubana airlines plane
killed over 70 people). Drug runners in the Bacardi-Cuban exile
networks, Jose Medardo Alvero-Cruz and Antonio Cruz Vasquez,
have been recently arrested for drug trafficking in the Caribbean
and Mexico. (23)

Seagram has also staked a conglomerate empire in Mexico.
Bronfman's contact is former Mexican President Miguel
Aleman, who owns and operates Acapulco. Today Aleman is
demanding the revival of casino gambling in Mexico; in the 1930s
nationalist President Lazaro Cardenas threw the casinos, and
with them Meyer Lansky, out of the country.

In short, wherever Seagram branches appear on the map, they
are thoroughly intermeshed with narcotics runners, gambling,
and crime.

One the public record, the Bronfmans' gutter connections are
most visible in the case of Mitchell Bronfman. The son of Knight
of Justice Allan Bronfman, Mitchell is reportedly never without
the automatic strapped to his shoulder and his stiletto strapped
on his left calf. He is on record with the Montreal Police, the
Quabec Provincial Justice Ministry, and the Royal Canadian
Mounted Police as a kingpin of organized crime in Montreal. (24)
A 1972 report by the Montreal Crime Commission names one
Willie Obront as the head of the syndicate in the area and

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describes the relationship between Obront and Mitchell Bronf¬

man as "almost a brotherly relationship." (25)

This relationship extends into illegal activities in which
they have mutually or jointly indulged . . . the special kinds
of favors they did for each other and the resulting
advantages of each in the fields of loan sharking,

gambling, illegal betting, securities, tax evasion and cor¬
ruption. (26)

Everything was on a strictly "friendly basis," claims Mitchell.

Obront first came to the attention of the authorities after two of
his Quebec nightclubs used as hangouts for Montreal's under¬
world were raided. It was revealed that Mitchell's friend was one
of Montreal's top movers of dirty money from narcotics, prosti¬
tution, and loansharking.

Together with Willie, Mitchell Bronfman is a minority partner
in the Pagoda North, a Miami restaurant that has been identified
by U.S. and Canadian law enforcement agencies as the head¬
quarters for a continentwide illegal bookmaking syndicate run by
Vito Genovese.

Willie Obront was convicted in 1976 of "tax evasion" and
put behind bars. Mitchell Bronfman narrowly averted the same
fate.

Another one of Mitchell Bronfman's business partners is
Sidney Rosen, who was also arrested and convicted in 1975 for
looting 35 Canadian and American companies of $7 million
through an asset-stripping clearinghouse called Value Trend
Holding Company. Value Trend in turn laundered these stolen as¬
sets, along with other dirty revenues from illegal gambling, ex¬
tortion and narcotics, through Corporate Bank and Trust Com¬
pany of Freeport, Grand Bahamas and Flendon Ltd., of the same
address. Both companies are jointly owned by Rosen and Mitch¬
ell Bronfman through another holding company called the
"Milton Group." When Rosen went off to jail (again leaving
Mitchell Bronfman scot free), the $7 million passed unscathed
into offshore accounts in Barclays Bank in Freeport. (27)

But the two major corporations that Mitchell operates out of

ORGANIZED CRIME

287

are the mysterious "Securex" and "Execaire Aviation." The
former was disbanded in 1977 by Ouebec Provincial Justice
Minister Delat'd. While the Official Secrets Act has kept the
reasons behind this hidden, it can be stated with reasonable
certainty that Mitchell Bronfman and the company were dis¬
covered to be up to their necks in the wave of FLQ (Front pour la
Liberation du Quebec) terrorism that had plagued the province
since 1970 — not to mention the narcotics trade.

The two directors of Securex at the time of its banning were
Donald McCleary and Gilles Brunet, formerly RCMP sergeants
in charge of the G-4 (Secret Service Division) of the Mounties.
Both were fired from the Service in 1972 when it was discovered
that they were close associates of Mitchell Bronfman. (28)
McCleary and Brunet were in charge of the counterterror efforts
in 1970 when the FLQ kidnapped a provincial official and a
British government officer, an affair which led to the declaration
of a state of emergency. The emergency period was used as a
pretext to go after the French Canadian networks that had been
built up by de Gaulle in conjunction with the Vatican to liberate
Quebec from British colonial status.

In point of fact, the FLQ was itself funded by Bronfman family
networks as an extension of earlier efforts to assassinate French
President de Gaulle (the story will be told below). The Bronf¬
mans' FLQ option was the North American version of the British
Special Air Service's control over both the Provisional Wing of
the Irish Republican Army and the British Army's countertenor
efforts.

Securex advertises itself as a security "consulting firm
specializing in anti-terrorism, anti-kidnapping, and guerrilla
warfare training." (29) All things considered, it would have to be
regarded as both a semi-official covert branch of British intelli¬
gence in Canada and as a bridge to the criminal underworld.

Its affiliated Execaire Aviation emerges as yet another
scarcely concealed front for crime. Execaire is the largest
private charter airline service in Canada specializing in jet
service for business executives . . . and narcotics.

Is Mitchell Bronfman just the black sheep in the Bronfman
family? It is unlikely. Cernp, the Bronfman family trust, signed a

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guarantee for part of Execaire's line of credit at the Bank of
Montreal.

Nevertheless, the high publicity the Bronfmans have received
over the years for such exploits as Mitchell’s has prevented the
family from receiving that degree of respectability they have
always coveted. In the 1950s Mr. Sam looked across the fence at
the status of his friend Senator Jacob Javits and decided that he
would buy the ultimate title to confer respectability to his name:
he sought to become a Senator of the Canadian Congress. All told,
he spent $1.2 million in bribes. The Liberals took his money but
wouldn’t give him a seat. The Bronfman name was still too dirty
to be permitted in the ranks of Canadian politics.

In this regard, the Kennedy family fared much better.

2

The Kennedys:
Organized Crime
in the Government

There are some facts in the mind of the American public that
hint at the reality behind the "Kennedy look": Ted's Chappaquid-
dick disaster, Judith Exner Campbell's revelations that Chicago
mobster Sam Giancana had given her to Jack, and the well-
known stories of Papa Joe's bootlegging days. The suspicions are
there but Americans aren't really sure what the Kennedys are;

after all, if they're so dirty, how do they stay so clean?
Dope, Incorporated supplies the answer. The Kennedys are
clean because, beginning with Papa Joe, they were flea-dipped,
scrubbed, and polished by the British to be the respectable front
for organized crime. Whether or not a Kennedy crosses the
British Crown in terms of policy — as Jack Kennedy did in 1963 —
does not alter the fundamental content of the political machine
that gives the Kennedy dynasty its power. The Kennedy machine
is organized crime in government.

If Ted Kennedy becomes President in 1980, whom will he owe

debts to? The same people who pay for him now. At the top of the
list of contributors to Kennedy's 1976 senatorial campaign
released by the Federal Elections Commission is one Joseph

Linsey. (1) A Massachusetts bootlegger who maintains con-

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nections to Meyer Lansky from the 1930s, Linsey sits on the board
of International Airport Hotel Systems Inc., a Miami-based
company whose board also includes Lansky. Hotel Systems is
also connected to Resorts International, a firm we will soon hear
more of. FBI wiretaps showed recently that Linsey also has
dealings with Raymond Patriarcha, the titular godfather of New
England narcotics trafficking. (2) Patriarcha is a partner of the
Jacobs family (whom we will also encounter later) in several
business ventures, including a multimillion dollar a year slot

machine company in St. Louis. Although sentenced to jail for

murder, Patriarcha was released over four years ago when
doctors "discovered he was suffering from a case of terminal

cancer" from which he presumably still suffers.

Among the business enterprises of Kennedy financier Joseph
Linsey are two liquor distributing firms. Crown and Whitehall,
and a dogracing track in Tauton, Massachusetts. Whitehall's

chief "salesman" Mike Rocco was described by the McClellan
Committee hearings on organized crime, in which both John and
Robert Kennedy participated, as a "collection man for the
mob." (3) Linsey's chief political lobbyist, Hirsch Freed, is a
senior partner in the law firm of Brown, Rudnick, Freed, Gesmar
and sits on the board of the Combined Jewish Philanthropies of
Boston. Freed and all of his law partners are generous donors to
the Kennedy campaign fund. (4)

It is the character of Kennedy's friends rather than his own low
personal standard of morality that explains why as a leader of
the powerful Senate Judiciary Committee he has come forward
as the leading sponsor of federal legalization of marijuana and
why he has given his approval to decriminalization of heroin "for
experimental purposes." The job of the Kennedy dynasty is to
usher in British dope and the criminals who distribute it —
through the front door.

The rise to power

Papa Joe Kennedy did not have to struggle like the Bronfmans
did to make their name and money in the world of crime — he

ORGANIZED CRIME

291

was bom into it. Joe's father P. J. Kennedy was one of the shanty¬
town mobsters of late 19th century Boston.

P. J. began his rise to fortune as a tavern keeper who bought
his way into the corrupt Democratic Party machine (a machine
that, like the Jacob Astor-Aaron Burr power system in New York,
had its roots in opium trafficking). Once he had obtained a seat
on the ward's Democratic Committee at the age of 26, P. J. gave
up his tavern and went into the more lucrative wholesale liquor
business. Two years later in 1886 he began the first of five
consecutive terms in the Massachusetts State Legislature. By
1896, he was part of the Uiumvirate of Kennedy-Donovan-Cor-
bett, known as the Board of Strategy, which conUolled the Demo¬
cratic organization in Boston. But it was common knowledge that
the secret to P. J. Kennedy's political success was his control of
the local crime ring, the "McGuire Gang." (5)

Joe Kennedy's mother sadly recognized that with her husband,
her social pretensions could never be realized for herself.
Kennedy's public image was so filthy that he could not even
Qualify for entry into the "High Irish" social circles of Boston, let
along the Brahmin elite centered around the opium smuggling
Perkins family. She set her hopes on her children. It was Joe
Kennedy's marriage into the Fitzgerald family (over the
vehement protests of his father-in-law, Boston's High Irish
Mayor "Honey" Fitzgerald) that launched the Kennedy family
into high society.

Nevertheless, when Joe Kennedy went to Harvard he was
snubbed and ridiculed by his Brahmin classmates, who never
missed a chance to remind him of his family's seedy history.
Joseph bitterly referred time and again to his rejection by the
exclusive "final clubs," Harvard's most desired status
symbol. (6)

After World War I, Kennedy was employed by Galen Stone, a
partner in the prestigious Hayden, Stone and Co., a Boston Hat
street investment house with ties to the Rothschilds. While there,
he made his first contacts with the British aristocracy. Kennedy
got wind that one of Hayden, Stone's clients, the British company
of Robertson-Cole Pictures, was in the throes of a credit squeeze.
The ambitious Irishman went to London to seek the purchase of

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the company's U.S. distribution affiliate, the Film Booking Com¬
pany. He was turned down flat. Within a month, however. Lord
Inverforth arrived in Boston to take Kennedy up on the offer.
Through a subsequent merger With Ideal Films Ltd. Kennedy
founded what was described at the time as the "first genuinely
reciprocal exchange of production and distribution facilities
between British and American companies." (7) Kennedy's joint
ventures with the British soon produced RKO studios, ushering in
British financial and cultural domination of Hollywood.

Kennedy's film ventures were also noteworthy for another
reason. Lord Inverforth later showed up during World War II
working closely with British Secret Intelligence Services chief
William Stephenson ("Intrepid"). (8) The Robertson-Cole deal
was Kennedy's first contact with Britain's aristocratic high
command.

In 1929, Kennedy joined with Blair and Co., a firm operated by
Elisha Walker, later of Kuhn, Loeb, and Jacques Monnet, to bid
for control of A. P. Giannini's Transamerican Co., the controlling
company for the Bank of America. The attempt failed, but
Kennedy gained another invaluable contact. Jacques Monnet had
come to North America to represent his family's liquor business,
Monnet et Cie., in dealings with the Hudson's Bay Company. In the
period that Kennedy was working with Blair and Co., Monnet was
traveling to Shanghai on a financial mission for the League of
Nations. Since the delegation came on the invitation of notorious
opium dealer T.V. Soong, and given Monnet's associations with
the Hudson's Bay, it is likely that more was on the agenda than
the financing of Chinese railroads.

Papa Joe also had business liaisons with the seamier side of the
illegal distribution market. During his own bootlegging days in
Prohibition, Kennedy entered into a coalition with Newark's
Reinfeld Syndicate, which it will be recalled was 50 percent
owned by the Bronfman gang. Joe retained his business dealings
with the syndicate thugs all the way until 1946. At that time, in
preparation for the launching of his sons' political careers, Joe
sold his liquor company, Somerset Importers Ltd., for $8 million
to the "Renfield Importers" — a revised version of the Reinfeld
Syndicate. (9)

ORGANIZED CRIME

293

As the end of Prohibition approached, Kennedy again turned to
London where Winston Churchill personally approved the
grant to Joe of the British distillers' franchise for the
American market. Through Kennedy's Somerset Importers Ltd.
and Renfield Importers, Kennedy marketed Dewar's scotch,
Gordon's gin, Ron Rico rum, and Haig and Haig. (10)

But as Papa Joe made clear early in the game, he was not in it
for the money. His goal was to build a political dynasty, and his
wife produced nine children in succession to get it going.
Churchill's nod of approval and the cash flow accompanying it
signalled that the British were ready to take advantage of Joe
Kennedy's political ambitions.

Kennedy acknowledged the deal by placing his accumulated

fortune in the hands of one of the inner circle of London finance:
Lazard Brothers Ltd. Andre Meyer, head of the U.S. branch of
that house, became the manager of the Kennedy Estates. Lazard
Brothers Ltd. is owned by Viscount Cowdray (Weetman John

Churchill Pearson), cousin of Winston Churchill.

In 1933, Kennedy was appointed by President Franklin Roose¬
velt to head the new Securities Exchange Commission.
Kennedy's earlier association with the London banking circles

had put him in the inside track to conduct a flurry of stock

speculation on the eve of the 1929 stock market crash and walk
away from it all with a pocket full of cash. When the SEC was
created to regulate the market, Roosevelt returned Kennedy's
1932 favor of swinging the Boston Democratic machine behind

the FDR candidacy at the 1932 nominating convention.

In 1936, FDR appointed Kennedy U.S. ambassador to Great

Britain, a post Kennedy wanted more than life itself. As Joe’s

official biographer explained, "The old American aristocracy,
with its Anglophilic leanings—the aristocrats that had rejected
Kennedy at Harvard—regarded the post as the nation's highest
social office." (11) Kennedy had at last succeeded in giving the
Boston Brahmins a kick in the teeth. Once in London, the Royal
Family further obliged the funny Irishman by posing with his

family in full regalia for the newspapers.

Kennedy quickly attached himself to the most pro-Nazi British
aristocrats centered around Lady Astor's Cliveden Set where

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Round Table figures such as Lazard Brothers' Lord Robert
Brand, the Marquess of Lothian, Fabian George Bernard Shaw,
and the opium-trading Sassoon family congregated to dictate
Britain's appeasement policy for the British Foreign Office.

Kennedy's antics in Britain soon got back to President Roose¬
velt who, by the outbreak of World War II, had developed a fairly
accurate view of Britain's imperial designs. Kennedy's notoriety
as a Nazi supporter — like his father's earlier underworld career
— could not be covered over by even the most sympathetic
biographer. Thus, David E. Koskoff in his commissioned
biography of Joe Kennedy reported the following:

Kennedy had become intensely Anglophilic: "Indeed there
are unfortunate signs that Kennedy is going by way of
Page." They reported that he was one of the prime exhibits
of Cliveden . . . that he was a partisan of England and
should be watched carefully.

From the beginning of the Ambassador's career to the end,
the spectre of Walter Hines Page haunted Joseph Kennedy.
From his position as Ambassador to England. Anglophile
Page had literally conspired with the British to bring
America into World War I. . . . Kennedy always resented
the fact that his name was always linked with Page. . . .
Even Roosevelt said before the outbreak of war, "He's
more British than Walter Hines Page." (12)

Kennedy's unswerving loyalty to the British monarchy was
rewarded; his daughter, Kathleen Kennedy, the sister of John,
Robert, and Edward, married William Cavendish, the Marquess
of Hartington. Hartington was the son and heir to the 10th Duke of
Devonshire and his wife. Lady Mary Alice Cecil (daughter of the
4th Marquess of Salisbury), the Dutchess of Devonshire.

In the hierarchy of the British nobility, the dukes are the
highest rank of royalty, taking second place only to the monarchy
itself. The Duke of Devonshire is at the center of the interlocking
families of the Cecils, Salisburys, and Macmillans who have run
British politics since the Glorious Revolution.

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295

Joseph Kennedy repeated the theme many times: "If Kathleen
and her husband were living, I'd be the father of the Duchess of
Devonshire (first Lady-in-Waiting to the Queen) and the father-
in-law of the head of all the Masons in the world." (13) Later, his
son John would marry Jacqueline Bouvier, whose sister Lee
Radziwill married Prince Stanislaus Radziwill, a member of the
Polish nobility who traces his titles back over 500 years. The
Radziwill family, which resides in England, established the
Order of St. John of Jerusalem in Poland in 1610 and was instru¬
mental in transplanting the Order into the United States in the
early 20th century. While serving as ambassador in Britain,
Joseph Kennedy was made an initiate in His Majesty's Most
Venrable Order of St. John of Jerusalem.
Despite Joseph Kennedy's eventual unceremonious recall from
the Court of St. James at the beginning of World War II, the elder
Kennedy had succeeded brilliantly in restoring his tarnished
reputation. During his sojourn in Britain, he turned over his sons
to the British Round Table for a "proper" education. Joseph
Kennedy, Jr. and John F. Kennedy were trained at the London
School of Economics, an institution founded by the Fabian
Society dedicated to training and recruiting foreign cadre as
future British agents within government, business, media, and
educational posts in their respective countries. The Kennedy
brothers were trained by Fabian Society Executive member Harold Laski.
At Harvard, on the Kennedys’ return to the United States,
further tutoring for son John was seemed from Sir John Wheeler-
Bennett, the founder and head of the research division of the
Royal Institute of International Affairs. Wheeler-Bennett denies
that he was the writer of Kennedy's Harvard master's thesis,
later published in book form as Why England Slept — an apologia
for the Cliveden Set's and his father's sympathies for Hitler. (14)
There is little doubt that Wheeler-Bennett was aware that he
had been entrusted with the training of Britain's future political
kingpins in the United States. As he recalls:

I was invited one evening to dine informally at the

American embassy. We were a small party, not more than

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ten, as I recall, and the three eldest Kennedy sons sat in a

row on

the far

side

of the

table to myself. . . . "I'll

tell

you

about

these boys,"

said

the Ambassador to me

in

his

rasping

nasal

voice, as

if they weren't there

at

all.

"There's

young

Joe, he’s

going to be President

of

the

United

States.

And

there’s

Jack, he's going to be a

univer-

sity president; and there's Bobby (tapping his nose in a

cunning manner), he's the lawyer." (15)

Why the British killed Kennedy

When John F. Kennedy became President of the United States
in 1960, it is reported that Andre Meyer of Lazard Brothers Ltd.
went around Europe introducing himself as "the real President."
Whether the story is true or not, it is the case that the Court of St.
James had at least temporarily seized control of the Oval Office.
So had organized crime. The Kennedy machine moved into the
Justice Department, specifically Robert Kennedy's Organized
Crime Strike Force. The Organized Crime Drive, as it was called,
was a highly irregular unit, even according to its nominal chief,
Ed Silberling. The section was in fact run by non-lawyer Walter
Sheridan, a former FBI man who had worked as Chief of the
Counterintelligence Section, Special Operations Division, Office
of Security, and the National Security Agency. It was Sheridan
who had the ear of Robert Kennedy, often as much as three times
a day. (16)

According to Victor Navasky's Kennedy Justice, the Sheridan
crew "had free access to the files of the McClellan Committee. It
was in touch with grand juries throughout the country. It had an
undercover air of mystery about it. Its modus operandi was cloak
and dagger. . . Its relations with the FBI were highly irregular in
that it received little or no cooperation from the top, yet
Sheridan, an ex-FBI man, had a degree of line cooperation in the
field that was, in some respects, unparalleled. He actually
coordinated FBI agents with his own men — told them where to
go when, and they went.

"Unlike every other unit of the Justice Department, which is

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297

organized around subject areas of responsibility," reports
Navasky, "the Sheridan unit's raison d'etre seemed to be not a
subject area but a target: Jimmy Hoffa." (17)

If Kennedy himself was obsessed with getting Hoffa, the
machine behind him found the campaign a convenient ruse for
three reasons. First, it badly damaged the biggest and strongest
trade union in the country, which had consistently used its power
to press for industrial growth. Second, the publicity it engendered
was a good diversion. And third, it was a good cover for going
after local Mafiosi who might object to a tightened drug
syndicate and the rise of the new black mafia to service the cities.

The fanfare around the Valachi revelations served the same
purpose.

A look at the ensuing careers of the Kennedy crimefighters
underlines the point.

*Henry Peterson of the Organized Crime and Racketeering
Division joined Max Jacobs's Emprise Corporation, a money¬

laundering outfit examined in Section 4.

*His boss William Hundley and Robert Peloquin of the
Criminal Division left Justice, formed their own law firm, and
now sit on the board of International Intelligence (Intertel),

Meyer Lansky's crime clearinghouse (see Section 3).

*Stanley Mills, head of the Kennedy Anti-Trust Division,
became general counsel for Max Jacobs's Sportsystems.

*William O. Bittman, prosecutor for the Justice Department
against Hoffa, joined the board of Sportsystems.

*Daniel Holloman and Thomas Kennedy of the Organized

Crime Division joined the same board.

*Horace Webb of the department's Public Informational

Services Division is the public relations man for Sportsystems.

*Thomas J. Mekeon, member of the Organized Crime Strike
Force in Detroit, is assistant general counsel and vice-president
of Intertel.

While Sheridan's "Terrible Twenty" burned the small fry,
Meyer Lansky and Max Jacobs went untouched. Lansky's

biographer. Hank Messick, could even report that "Lansky could
deplore the loss of Newport and Hot Springs, but the attack on La
Cosa Nostra caused him no loss of sleep. Instead, from 1960 to

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1965, he succeeded in keeping his name completely out of the
newspapers. That five-year period was for Lansky one of the
most active, and profitable, eras he had known." (18)

DOUBLE-CROSS

Meanwhile, in the White House John Kennedy was being
advised by the higher echelons of the same network that had
invaded the Justice Department. Almost simultaneously with
Kennedy's inauguration, Harold Macmillan moved into 10
Downing Street. Macmillan was himself part of the extended
Devonshire family into which Kennedy's sister Kathleen had
married. His Canada-based pulp and paper company, MacMillan
Bloedel, as noted, was a component of the British Columbia drug¬
smuggling apparat. (19)

Macmillan's newly appointed ambassador to the United States,
David Ormsby-Gore (later Lord Harlech), was also a distant in¬
law of the President through the Cecil family. Ormsby-Gore had
been a close friend of JFK's since their days together at the
London School of Economics. The British ambassador had daily
access to the President. He was the fourth member of Kennedy's
inner policy-making core, "ExComm," along with Robert

Kennedy and the Anglophile National Security advisor McGeorge
Bundy (also a Harvard protege of the Round Table's William
Yandell Elliott). During the Cuban Missile Crisis, documents
show that Ormsby-Gore and Macmillan made most of the

minute-to-minute decisions at the point that the United States
was on the brink of nuclear war.

Best estimates have it that up through the winter of 1962-63,
British directives to the White House, transmitted through
Ormsby-Gore, were carried out with only minor points of
difference. That special relationship began to show signs of
deterioration during early 1963. Policy differences between the
Kennedy and the Macmillan governments began to surface, as

the U.S. President took a series of initiatives toward detente
with the Soviet Union and Cuba. (20)

The diaries of Macmillan testify that Kennedy had to be in¬

tensely armtwisted at the famous Nassau summit in spring 1963
before he would agree to turn over the Polaris missile program

ORGANIZED CRIME

299

to the British. (21) That move precipitated French President
Charles de Gaulle's vehement denunciation of the Anglo-
American violation of the Atlantic Charter, followed by France's
withdrawal from NATO.

A combination of factors was operating on Kennedy. Foremost
among them was Papa Joe. Individuals, interviewed by the
authors, who knew Joe Kennedy intimately during the 1920s
report that he cherished a deep hatred for the British and the
Anglophile society of Boston that had humiliated him; however,
the same individuals report, Kennedy had made a decision that if
he was going to make it, he would have to prove his usefulness to
the British. With John Kennedy's accession to the Presidency,

Joe Kennedy's dream of using the British to build a sufficient
power base for himself was a reality. No astute political observer
during the 1960s could ignore the possibility of a "Kennedy
dynasty" installed in the White House for several uninterrupted
decades.

During the spring and summer months of 1963, JFK began
reversing previous policies. Plans were being prepared to
devolve U.S. presence in Southeast Asia. Detente discussions
were opened up with the Soviet Union; in the weeks prior to his
assassination, Kennedy even sent a secret emissary to Havana to
open up talks with Fidel Castro. The Kennedys were showing
signs of bucking the machine that had put them in power. The
British had him killed. To use the language of a Grade-B movie,
"Kennedy tried to double-cross the syndicate and he got iced."
It is reported by Kennedy biographer Koskoff that upon JFK's
death, Lord Beaverbrook (whom we shall encounter in regard to
the International Assassination Bureau) sent a scarcely veiled
warning to Joe Kennedy:

Perhaps he (Joe Kennedy—ed.) was a little comforted by
the kind note that his dear friend Lord Beaverbrook sent to
Rose: "May Joe find solace. . . in the assurance that Bobby
will repeat Jack's career." (22)

When Robert Kennedy refused to back off from the track of his
brother's assassins and began to prepare his own campaign for

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the Presidency, he too was assassinated on British orders.

Playing by the rules of the game is Ted Kennedy's insurance
policy. That’s what makes him the foremost proponent of dope
decriminalization; that's what makes him today's frontrunner
for organized crime; that's what makes him the collaborator of
the assassins of his brothers.

Britain's Assassination
Bureau: Permindex

Following the assassination of President John F. Kennedy in
Dallas on November 22, 1963, New Orleans District Attorney
James Garrison launched an investigation that led him to the
doorsteps of an obscure Montreal-based corporation called
Permindex, headed by the Bronfman family's attorney. Major
Louis Mortimer Bloomfield. One of the directors of Bloomfield's
ostensibly small international trading company. Col. Clay Shaw
of New Orleans, was Garrison's chief suspect in the Kennedy
murder. Shaw ran the World Trade Mart in New Orleans, a
subsidiary of Permindex that was described by a former Shaw
associate (1) as a front for Mafia drug-running and organized
crime activity centered in the Caribbean.

Shaw was the financial backer and controller of Lee Harvey
Oswald during his lengthy stays in New Orleans, Garrison had
established, and the District Attorney also had evidence that
Shaw had been the safehouse channel out of the country (into
Italy) for several unidentified persons believed to have been the
real "triggers" in the Kennedy assassination. (2)

301

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DOPE, INC.

James Earl Ray, the "patsy" in the 1968 assassination of
Martin Luther King in Memphis, was also a frequent visitor to
Shaw's New Orleans’ World Trade Mart during the month before
King's murder. Ray escaped via Canada to London where he was
traced and captured a month after King died. (3)

After more than a half dozen mysterious deaths of key
witnesses against Permindex and a national smear campaign
against Garrison run by Kennedy Justice Department
troubleshooter Walter Sheridan, the New Orleans investigation
into Permindex was temiinated, and the entire affair quickly
faded into obscurity.

After an estimated 30 to 40 aborted assassination attempts

against Lrench President General Charles de Gaulle during the

1960s, the Lrench intelligence bureau, SDECE, exposed the same
Permindex as the financier and controller of the OAS (Secret
Army Organization) death squads. (4) SDECE gathered reams
of evidence showing that Permindex had been the recipient of
funds laundered into Geneva and Basel through Zionist
"charitable organizations" and Israeli intelligence fronts such as
the Bank Hapoalim of Histadrut, the Israeli trade union

movement and Socialist International affiliate. These funds had

been channeled into the OAS as well as into the neo-Nazi terrorist
groups in West Germany and Italy.

De Gaulle issued vociferous personal protests to the Swiss and
Italian governments. As a result, Permindex was forced to shut

down its offices in those countries and move to a more friendly
location, Johannesburg, South Africa. (5) The Paris-based
Western European branch headquarters of Israel's foreign

intelligence service, the Mossad, was kicked out of France and

reestablished its operations in Belgium and the Netherlands.

In 1970, the prestigious Italian newsweekly Panorama
published an account of the mysterious death of Italian Oil

Minister Enrico Mattei in an October 1962 plane crash on his was
to a historic economic summit in Africa. (6) Mattel's plane was
sabotaged during a contrived unscheduled stopover at an obscure
airport in Sicily. Forty-eight hours before the crash. New Orleans

ORGANIZED CRIME

303

mobster and Permindex associate Carlos Marcello had been

identified by local police in Sicily as the mysterious American

who showed up at the airport while a four-man team was

tampering with Mattel's plane. Marcello owned a private fleet of
chartered jets called the United Air Taxi Service, which shared
its staff of pilots and mechanics with Permindex. One such

"shared employee," David Ferrie, was also a pilot for Marcello
and Clay Shaw. Ferrie was found murdered days after he was
subpoenaed to testify before Garrison's grand jury on the
Kennedy killing. (7)

Within months of the April 1978 kidnapping and murder of
former Italian President Aldo Moro, the Italian Carabinieri were
in hot pursuit of evidence firmly implicating Italian Jewish
banker George Mantello (aka George Mandel) in the affair. (8) It
was believed that Mantello's Rome villa had been the first
safehouse where Moro was brought after his abduction by the
Red Brigades. Weapons found in a Carabinieri raid of Mantello's
villa turned out to match the weapon used to kill Moro as well as
that used in the 1977 Baader-Meinhof gang kidnapping-murder of
West German industrialist Hanns-Martin Schleyer. An agent of
the Black Guelph House of Savoy (the pretenders to the throne of
Italy), Mantello is a board member of a Permindex subsidiary,
Centro Mondiale Commerciale (CMC). Mantello's Swiss holding
company, Capocetto, was exposed by de Gaulle's SDECE as a
conduit for Histadrut funds into Permindex. (9)

Who runs Permindex?

Sixteen years have passed since Permindex conducted its first
known assassination deployment. Despite all the accumulated
evidence, none of the principals has been brought to justice;

Permindex today is one of the best kept secrets in the world.

What is Permindex? Who are the powerful forces protecting
his nest of assassins from prosecution for crimes of high treason
against no fewer than three sovereign states? As we shall soon
learn, Permindex is a top-secret branch of one of the most

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sophisticated and well-financed intelligence agencies in the

world and a convergence point for every filthy network that we
have met so far — from the British Far East banking and

shipping magnates who run the dope trade at the top to the

gutters where Mafiosi, neo-Nazis, and the Order of Zion function
as retailers for Dope, Incorporated.

The starting point to unravel the story behind this International
Assassination Bureau is the office of the chairman of its board.
The founder, president, and majority (50 percent) shareholder
in Permindex since its incorporation in Montreal in 1958-59 is
Major Louis Mortimer Bloomfield.

Bloomfield is a man of many hats. He was a founding partner of
the prestigious Hofjuden law firm of Phillips, Vineberg,
Bloomfield and Goodman, the firm that represents and controls
the Bronfman family holdings. Bloomfield's name was formally
removed from the firm's letterhead in 1968 after the de Gaulle
exposures of his Permindex assassination bureau threatened to
create an embarrassment. Such cosmetic gestures, however,
have little significance in the murky world of Canadian politics
where the most prestigious names all appear on the board of
directors of Dope, Incorporated.

Among his business holdings. Major Bloomfield controls the
Israeli Continental Corporation, the Canadian subsidiary of the

Dutch Heinekens Breweries, and Credit Suisse of Canada, a
correspondent bank to the Credit Suisse of Geneva that was
among the holding agencies exposed by SDECE for laundering
"hit money" to the OAS. (10) All these corporations are listed
among the investors in Permindex.

Like his law partner, Lazarus Phillips, and his clients, the
Bronfmans, Major L. M. Bloomfield is an outstanding Zionist
philanthropist. Among his numerous honorary positions,
Bloomfield is the annual chairman of the Histadmt Campaign of
Canada, which collects "charitable contributions" and passes
them on to the Israeli labor movement. Curiously, these funds
have been discovered on several occasions to have found their
way back to Permindex after recycling through the Histadrut's
Bank Hapoalim. (11)

Bloomfield's charitable activities extend into his chairmanship

ORGANIZED CRIME

305

of the Canadian Red Cross ambulance service, a position
traditionally held by a top-ranking Knight in the Queen's official
chivalric order, the Most Venerable Order of St. John of
Jerusalem. As an operating arm of the Sovereign Order, the Red
Cross ambulance service has been a frequently called upon front
for terrorism. (12)

Bloomfield's business interests extend into the field of

transoceanic shipping. A former head of the Israeli Maritime
League of Canada, Bloomfield has been the Consul-General in
charge of the Western Hemisphere of the Liberian government
since World War II. Liberia is notorious as both a tax shelter and
smugglers' port-of-call. With no shipping regulations to speak of,
Liberia is the flag of convenience under which the majority of
ships bearing bulk shipments of Far East narcotics are
registered, and also serves as one of the secondary ($7 billion in
average daily transfers) offshore banking centers through which
British drug revenues are laundered.

The only other foreign-stationed Consul-General for Liberia is
Bloomfield-Permindex associate and Israeli Mossad official
(ret.) Tibor Rosenbaum, whom we shall meet shortly.

Beneath his various hats as banker, philanthropist, prominent
attorney, and Permindex director, Bloomfield is first and
foremost an agent of the most secretive branch of Her Majesty's
Intelligence service, the Special Operations Executive (SOE).

Bloomfield was recruited to the SOE by its director. Sir
William Stephenson, in 1938. (13) Stephenson, a Canadian-born
protege of Round Table founder Lord Beaverbrook, appointed
Bloomfield as the recruitment officer and "agent handler" for
the newly created counterespionage and espionage branch of the
U.S. Federal Bureau of Investigations (FBI), known as Division
Five. (14)

Agents of Division Five, in turn, have been among the points
of the New Orleans grand jury investigation into the Kennedy
assassination. Guy Bannister, the head of the southeast regional
office of Division Five (located in New Orleans) at the time of the
Kennedy murder, died under mysterious circumstances shortly
after the events in Dallas. (15) Bannister was the owner of a New
Orleans office building that housed a number of Division Five

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fronts and groups under close D-5 surveillance. These included
the left-radical Fair Play for Cuba Committee and the violently
anti-Castro Free Cuba Committee. Lee Harvey Oswald was
alternatively a member of both these groups during various
stages of his "laundering." (16) According to one source, in 1962
Bannister was also the personal conduit of at least one $100,000
payoff to the OAS for an assassination attempt against de Gaulle.
One of his agents flew directly from New Orleans to Paris to
deliver the funds. In 1966, that courier, who operated a
Permindex front, the Caribbean Anti-Communist League, died
when he was thrown out of a sixth floor window in a San Juan
Puerto Rico, hotel. (17)

How did Louis M. Bloomfield, a Canadian citizen, manage to
assume a highly secretive top post within the Hoover FBI? And
what's more, how did he manage to retain that post for over 30
years — even after his name had been raised in conjunction with
assassinations against officials of three governments?
Stephenson, using the "special relationship" that British Prime
Minister Winston Churchill had cultivated with Franklin
Roosevelt, arranged Bloomfield's commission as an officer in the
U.S. Army (hence the rank of major) assigned to the Office of
Strategic Services, the wartime predecessor of the Central
Intelligence Agency. Bloomfield was only one of many Canadians
brought into the U.S. military under Stephenson's auspices. (18)
Stephenson was creating an SOE in-depth penetration into the
American services that could run clandestine operations under
an American cover. This became a particularly important
feature of SOE postwar activities in locations like Italy where
Churchill's open role in installing Mussolini in power had engen¬
dered a profound hatred of the British.

Unfortunately, very little of the publicly accessible information
about the SOE is reliable. It is known that the SOE was created at
the personal initiative of Sir Winston Churchill as an expansion of
Section D (for "Destruction") of the British Secret Intelligence
Service, the branch responsible for "aggressive espionage and
sabotage" against enemies of the British Empire. (19)
Evidently, after World War II, the United States, in Churchill's
eyes, fit the definition of "enemy."

ORGANIZED CRIME

307

As the top secret action branch of British intelligence, the SOE
operated through "cutouts," especially commercial and phil¬
anthropic fronts. Stephenson set up SOE headquarters in New
York City's Rockefeller Center under the name of an importing¬
exporting company and established its communications and
clandestine center at a resort complex at Montego Bay,
Jamaica. (20) Under Major Bloomfield, Division Five's spies
operated as a Christian missionary group, sending its devotees to
every corner of the United States and Latin America. (21)

It should be noted that all the SOE's activities were conducted
under the protective umbrella of Her Majesty's Official Secrets
Act. Any British Commonwealth citizen releasing information
about the SOE without the advance permission of the monarchy
is liable to prosecution on charges of high treason, punishable by
execution. No wonder that the reliable sources of information on
the SOE are French, Italian, and West German intelligence
agencies.

A relevant feature of the wartime Stephenson-Bloomfield team
was its use of Mafiosi as "intelligence agents" for the U.S. OSS
and FBI Division Five. Charles "Lucky" Luciano is the best-
known case of a convicted drug-runner, pimp, and suspected
murderer who was "rehabilitated" under OSS-SOE sponsor¬

ship. (22) Luciano was dispatched to Sicily to reconstitute
old networks that had been dispersed or expatriated dur¬
ing the Mussolini period. Our point here is not to provide a biog¬
raphy of Luciano, but to show that Permindex’s Major Bloom¬
field came into active collusion with Meyer Lansky's narcotics
syndicate by no later than the close of World War II—when he was
more openly under the official auspices of the British monarchy.
According to a four-part series of articles published in October
1978 in the Soviet youth magazine Ogonyok by Julian Semyonov,
the Bloomfield-Luciano collaboration was still operational in 1962
when Luciano was the case officer on the scene in Sicily for the

Mattei assassination. The decision to go with a plane crash was
made by Luciano only after the options of hiring an OAS team or
an American "leftist" controlled by a Texas oil company
(invested in Permindex) were determined to be too politically
explosive. (23)

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Based on this profile of the many-sided Major Bloomfield, the
first pieces of the Permindex puzzle fall into place. Far from
being a small international trading company, Permindex is
revealed to be a subsidiary branch of the most powerful, well-
financed, and well-protected intelligence agency in the world — a
subsidiary branch responsible for carrying out the most
important political assassinations of the century. The next step in
completing the Permindex puzzle is untangling the complex web
of holding companies, dummy corporations, and offshore sealed
bank accounts through which the Permindex Assassination
Bureau works.

The Bloomfield, Lansky,

Rosenbaum circuit

Sufficient evidence has surfaced in the public record to show
that Permindex is the courier channel through which the retail
revenues of Dope, Incorporated are shuttled from the regional
syndicates into designated secret bank accounts in Geneva,
Basel, Liechtenstein, and the Caribbean.

Even in its official records, Permindex cites among its
investors the regional crime czars of North America and the
Caribbean, the lieutenants of Meyer Lansky. (24) From 1928,
when he inherited the bootleg booze and narcotics trade from the
deceased Arnold Rothstein, Lansky has been the undisputed
"chairman of the board" of organized crime and the pusher
behind the move into bigtime narcotics, offshore banking, and
the Caribbean casino circuit. Lansky's biographer. Hank
Messick, estimates that Lansky's personal fortune exceeds
$300,000,000. Messick describes the weekly ritual in which the
regional syndicate couriers converge on the Singapore Hotel in
Miami to deliver 60 percent of their take to the "financial
wizard." From there money travels the route of Dope,
Incorporated. Reports Messick:

The scope of Lansky's interests is illustrated by a trip his
international courier, John Pullman, made in 1965. His first

ORGANIZED CRIME

309

stop was Bogota, Colombia. The Eden Roc in Miami was

his next destination. In Febmary he went to the Sands
Hotel in Las Vegas, where Lansky's old bootlegging chum
from Boston, Hy Abrams, was boss. In March he was

conferring in Los Angeles with Mike Singer, an ex-
Teamster official who had helped put together the Bank of

World Commerce (a part of the Permindex infrastructure
of offshore banks — ed.) with Alvin Malnik. Later in March
he was in Honolulu, where the syndicate was attempting to
get control of Ewa Plantation and hoped, eventually to
legalize gambling. In April he was at the Peninsular Hotel
in Hong Kong, where the syndicate had casinos and
obtained much of its narcotics. Lebanon and its casinos
were visited next. By June, Pullman was back in Switzer¬
land where he conferred with Lansky in person. Together
they visited the French Riviera to study plans for the
ultimate takeover of the casinos there. (25)

The money is placed in initial deposits in any one of a number
of Geneva, Basel, Liechtenstein, or Caribbean banks affiliated

with Major Bloomfield's little "trading company." Several of
these banks, like the Astaldo Vaduz of Miami, De Famaco Vaduz
of Liechtenstein, and De Famaco Astaldo Vaduz of Geneva, are
post office box fronts. These three, for example, are all listed as
wholly owned subsidiaries of Permindex. As noted above. Credit
Suisse, one of the more formidable laundering holes, maintains a
Canadian subsidiary, also run by Major Bloomfield. (26) The
Bank of World Commerce Ltd. of Nassau, Grand Bahamas, was
a personal creation of Lansky's. The largest and most important
banking entity in the Permindex-Lansky family was the Banque
de Credit Internationale (BCI) of Basel, which was bankrupted in
1974 as part of a London upset of world financial markets. (27)

BCI was itself almost indistinguishable from the infamous

Investors Overseas Services (IOS), an international "mutual

fund" which garnered an excess of $2 billion in investment

capital on behalf of "unnamed subscribers." (28) According to

Messick, there are strong indications that the majority of those

unnamed subscribers were named Meyer Lansky. IOS gained

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international notoriety for its army of salesmen who crisscrossed
the globe carrying satchels of cash earmarked for sealed bank
accounts in every unregulated banking port in Western Europe,
Latin America, the Caribbean, and the Middle and Far East.

Any sleuth attempting to trace out the originating source for
the IOS funds would do well to dig out the October 8,1967, issue of
Life magazine, which detailed the following interesting
triangular business relationship. (29) Sylvain Ferdman, an
officer of BCI, was the business agent for the Investors Overseas
Service. U.S. law enforcement officials in turn identified
Ferdman as the chief bagman for the Lansky syndicate.
Ferdman, a Swiss citizen, and John Pullman, an American who
transferred his citizenship to Canada after a 1950s federal
conviction, carried money from the Caribbean to Lansky, and
then on to the BCI and Bloomfield's Credit Suisse. Pullman, in
addition to his global travels, was the president and director of
the Bank of World Commerce Ltd. of Nassau.

So far the picture is very neat. BCI-IOS was the Swiss side of a
triangle composed of a dirty money professional hit bureau, and
Meyer Lansky's retail drug business in North America and the
Caribbean. Major Bloomfield's trading company in Montreal,
with branch offices in Geneva and Rome (through its subsidiary
Centro Mondiale Commerciale), ran the protection side of the
courier operation and was on the receiving end of those funds ear¬
marked for terrorism and political assassinations. (An
assassination such as the John F. Kennedy hit or any one of the 30
plus tries on the life of de Gaulle would cost upwards of $10
million between the preparatory work, the hit, and the cover-up,
which have often involved further murders.) The remainder of
the dirty money either went to the Far East to cover production
costs, to maintain the internal machinery of organized crime,
N.A., or to investment in "legitimate" business, and so forth.

The picture takes on additional political implications as we
probe further into the Banque de Credit Internationale.

BCI was originally established in 1959, at the same time Major
Bloomfield founded Permindex as an intelligence and financial
front for the Israeli Mossad.

BCI's founder and president was Tibor Rosenbaum, a close

ORGANIZED CRIME

311

associate of Bloomfield from at least the end of World War II
when both smuggled weapons, money, and mercenaries into the
Haganah. (30) Rosenbaum was subsequently appointed the first
Director-General for Finance and Supply of the Mossad (1948).

An Austrian lew who graduated from the economics department
of the University of Vienna (31), Rosenbaum, in addition to his
Mossad affiliation, was a cofounder of the World Zionist Congress
and a director of the Jewish Agency. The Jewish Agency in turn
created the Bank Hapoalim as the official agent for the Israeli
labor movement, Histadrut.

With the exception of Major Bloomfield, Rosenbaum is the only
foreign representative of the African smugglers' paradise,
Liberia.

The BCI was ostensibly founded as a vehicle for financing
illegal Israeli trade with Africa and the Third World; however,
this half-truth served merely to justify its location in the world
capital of secret banking, Switzerland, and its relationship to the
Mossad.

The picture emerges in full upon discovery of another member
of the BCI board of directors; Ernst Israel Japhet. Japhet
brings us straight back to the London banking circuit that runs
Dope, Incorporated.

Who is Ernst Israel Japhet in addition to his membership on the
board of the bank that serviced Meyer Lansky's retail revenues
from narcotics, gambling, prostitution? Japhet is the chairman
of the Bank Leumi, the largest bank in Israel, which we have
already identified as a link in the diamonds-for-dope trade into
Hong Kong. The latest heir of a German Hofjuden banking family
that traces its roots back centuries, Japhet was bought up by the
Quaker Barclays Bank of London, that created the wholly owned
subsidiary Charterhouse Japhet. The Japhet family's more
recent roots go back to Hong Kong's opium trade, into which the
family moved 150 years ago and never left (see Part II). The
Japhet bank was the granddaddy of the Palestine-to-Hong-Kong
dope-for-diamonds trade, now run by Bank Leumi under Mr.

Japhet, now on behalf of his 100 percent owners in London at the
staid offices of Barclays.

Joining Japhet on the board of Leumi is Baron Stormont

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DOPE, INC.

Bancroft, a member of the Hofjuden Samuel family, a former
Lord-in-Waiting to the Queen and a director and deputy chairman
of Cunard Lines, a shipping company heavily involved in the drug
traffic over Middle East, India, and Far East routes. (32)

Bank Leumi keeps its hand in the drug trade through its 100
percent owned subsidiary. Union Bank, of which Ernst Israel
Japhet is also chairman. Union Bank deals over one-third of the
world's diamonds.

Under Japhet, Bank Leumi bought into international terrorism
in 1976 when it took over the American and Argentinian
subsidiaries of the Banque pour le Commerce Continentale
following its bankruptcy. The BBC's branch in Montevideo.
Uruguay was the investment vehicle for the Israeli-Argentinian
financier David Graiver, who was the financial advisor for the
Argentine Montaneros. Graiver disappeared under strange

circumstances in 1976. It was publicly reported that he died in a
plane crash; however, subsequent reports speculated that he had
clandestinely moved to Israel. (33)

Bank Leumi was not the only Israeli bank to heavily invest in
the Banque de Credit Internationale. Even more heavily
involved is the Bank Hapoalim. As chairman of the Canadian
Histadrut Campaign, Major Louis Mortimer Bloomfield of
Permindex maintained direct cash flow relations to

Hapoalim. (34)

The Bank Hapoalim, the third largest bank in Israel, was

founded by the Jewish Agency, which runs the bank today. Its
founder and present board member, British High Commissioner
Viscount Erwin Herbert Samuel, belongs to the same Samuel
family that retains interests in Bank Leumi and Cunard Shipping
Lines. Viscount Samuel presides as head of the Israeli Red Cross,
an official branch of the Most Venerable Order of St. John of
Jerusalem. (35)

Bank Hapoalim has been widely exposed in the Western
European press as a dirty-money channel into Swiss and

Liechtenstein banks. (36) The charge is corroborated by the
presence of Bank Hapoalim director Zwi Recheter on the board
of Rosenbaum's BCI.

Another channel of Bank Hapoalim's complicity is the

ORGANIZED CRIME

313

Permindex family of dope traders and assassins is the Israeli
Continental Bank Ltd., a 50-50 joint venture between Bank
Hapoalim and its West German Socialist International
counterpart. Bank fur Gemeinwirtschaft. The German bank is
chaired by Walter Hesselbach, a member of the West German
branch of the Jerusalem Foundation, the Zionist branch of the
Order of St. John of Jerusalem. (37)

Stepping back for a moment, what have we now pieced
together? Within the sealed accounts and well-guarded board
room of the Banque de Credit Internationale we have uncovered
yet another point of convergence of the three divisions of Dope,
Incorporated: the production-distribution wholesaling division
represented by Bank Leumi director Ernst Israel Japhet, the
criminally syndicated retail division represented by the Lansky
bagmen Pullman and Ferdman, and the murder division
represented by the cash flow into Permindex. We have now
established that Israeli banking and the Israeli Mossad are
cutouts — like their Hofjuden sponsors — of the British
monarchy, which runs the whole show through its merchant
banks and its Knights of St. John.

The Nazi connection

Having set all the pieces in their appropriate places, we have
sketched the outlines of both an operational flow chart for Dope,
Incorporated (See Figure 1) and a global network of professional
murderers, narcotics traffickers, secret intelligence officers,
and portly London bankers and aristocrats.

Now let's return to the original question: what is Permindex?
Working under SOE "case officer-in-charge" Major Louis

Mortimer Bloomfield, at the executive offices of Permindex and
its subsidiaries — the Centro Mondiale Commerciale, the Italo-
American Hotel Corporation and Capocetto — is a rogue's gallery
of Nazis and Fascists, underworld bosses, and feudal throwbacks
- the sort of cast one would expect to encounter at the seat of
International Murder, Inc.

Begin with Prince Gutierez de Spadafora, the former

Figure 1. Dope Inc. Assassination Bureau

316

DOPE, INC.

Undersecretary of Agriculture for Benito Mussolini. Spadafora is
a director of Centro Mondiale Commerciale and the president of
the Sicilian Compagnia Amatrice Industriale Petrolifera
Armatoviole, a front for illegal arms smuggling. (38) The
prince's son married the daughter of former Nazi Finance
Minister Hjalmar Schacht, the architect of the Nazi economic
policy that led to the extermination of millions of Jews. Schacht's
other son-in-law was Nazi SS Colonel Otto Skorzeny, Hitler's
Special Operations executive. After receiving a slap on the wrist
for his wartime crimes against humanity, Skorzeny established
the Spanish-based ADSAP Corporation, which hired out former
Nazi SS paramilitary and intelligence specialists for projects
arranged through Schacht. (39)

George Mantello (a.k.a. Mandel), the Romanian Jewish
emigre whom we already encountered as a chief suspect in the
Aldo Moro kidnapping-murder and who was under investigation
by both the French SDECE and Garrison, is at once a board
member of CMC and the owner of Permindex’s Capocetto

subsidiary. Capocetto was revealed by several Italian

journalists (40) to be the liaison between the B’nai B’rith

International and such terrorist gangs as the Red Brigades and
the Baader-Meinhof, as well as a string of neo-Nazi groups in

West Germany and Italy. Implicated B’nai B’rith officials

included B’nai B’rith International Director Schlumberger, B’nai
B’rith Continental (the West European branch housed in Basel)
chief Erlich, B’nai B’rith France (also known as Ligue

Internationale contre l’Anti-Semitisme, or LICA) head Jean
Pierre-Bloch, and B’nai B’rith Austria director George Bloch.

Mantello is the financial advisor and investment banker for the
House of Savoy, the pretenders to the nonexistent throne of
unified Italy and the black nobility sponsors of Mussolini. (41)

The administrative officer of Permindex is Max Hagerman,
the editor of the West German right-wing newspaper National-
Zeitung, Israeli media have denounced National Zeitung as a
"neo-Nazi" publication.

Ferenc Nagy was the President of Hungary during the Nazi
occupation. Nagy tendered his resignation as President in 1946

ORGANIZED CRIME

317

via an infamous telephone call placed from a bank lobby in
Geneva. A member of the Eastern European branch (founded by
the Radziwill family) of the Order of St. John of Jerusalem, Nagy
relocated to the United States during the 1950s. Here he became
the titular head of a number of White Russian-Eastern European
groups which performed covert services for Allen Dulles and
Division Five of the FBI in Eastern Europe, employing former
members of the Hungarian fascist movement, Arrow Cross. (42)
According to one source, Nagy came under the close scrutiny of
New Orleans District Attorney Garrison for possible involvement
in the John Kennedy assassination. (43) Nagy was in Dallas for
the four-week period leading up to November 22, 1963, as case
officer for Permindex and Division Five. Along with Nagy,

Garrison was investigating the simultaneous surfacing of George
Mantello in Los Angeles. Garrison established that Nagy and
Mantello were both business and personal associates of Carlos
Marcello, the New Orleans lieutenant of Meyer Lansky who
carried out the assassination of Enrico Mattei.

Giuseppe Zigiotto, on the board of CMC, is the head of the
House of Savoy Italian neofascist movement called the Fascist
National Association for the Militia Arms.

Carlo D'Amelio, another Permindex-CMC board member, is an
agent for the Italian black nobility houses of Savoy and
Pallavicino. From the Mussolini period, d'Amelio was the
attorney representing the grouping of oligarchical families that
imposed the fascist dictator in collaboration with Sir Winston
Churchill. This grouping was known as Circo Rex ("Royal
Circle") and is believed to exist today as the control point for the
Red Brigades, the neofascist cells, and the Autonomi (a mass-
based anarchist counterculture movement parallel to the youth
movements out of which Mussolini recruited his Black Shirts.)

The Pallavicini family, in addition to its sponsorship of terrorism
and destabilization against the Italian government, is deeply
involved in the Lebanese fascist movement, the Falange, through
blood ties into the Coptic Christian families of Lebanon.
On November 11, 1978, the Italian government's antiterrorist
director. General Delia Chiesa, delivered a significant setback to

318

DOPE, INC.

this oligarchical network by arresting Paolo Sebregondi on
charges of conspiring with the Red Brigades in the assassination
of Aldo Moro. Sebregondi is the son of Countess Viondi and
grandson of Princess Resta-Pallavicino, the former maid-in-
waiting to the Queen of Italy. Paolo's brother, Stefano
Sebregondi, known to be presently hiding in Mexico, is also being
sought by Delia Chiesa in the same case. The exposure of this
long-concealed link between the ostensibly gutter-level left
radical Red Brigades and the Houses of Savoy and Pallavicini —
the employers of d'Amelio and George and Enrico Mantello —
establishes the chain of court admissible evidence for the
Permindex role in carrying out the murder of Aldo Moro at the
behest of the Black Nobility centered in London.

One of the principal channels of laundered money for
Permindex-CMC's assassination teams is in the Seligman Bank
of Zurich, a bank represented directly on the board of
International Assassination Bureau by Hans Seligman, the
director of the bank.

Although not an officially cited board member of any of the

Permindex fronts, John De Menil bears special note as an
indispensable business partner of Major Bloomfield. DeMenil is
the president of the Schlumberger Corporation of Houston and
southern Florida. The firm was implicated by Jim Garrison
along with Permindex in smuggling guns and explosives to anti-
Castro Cuban exiles who also came under investigation for the
Kennedy assassination. DeMenil worked with a CIA Miami-
based front called "Double-Chek," which in turn was a contact

point for Major Bloomfield's FBI Division Five. (44)

DeMenil is a White Russian emigre who fled to France,
married into the wealthy Schlumberger family, and eventually
settled in Houston to open a U.S. branch of the family's heavy)
machinery firm. DeMenil was a close associate and contact man
for Permindex case officer Nagy during the preparation period
for the Kennedy assassination. (45)

One of DeMenil's closest associates is Col. Clay Shaw, a

member of the Permindex-CMC board. Shaw was Garrison's

chief suspect in the Kennedy killing and is the business partner of

ORGANIZED CRIME

319

Carlos Marcello. Shaw's circle of former associates who myster¬
iously died before they could testify before D.A. Garrison

included: David Ferrie, Shaw's former pilot and employee at the
World Trade Mart; Guy Bannister, the southeast regional chief
of Major Bloomfield's Division Five of the FBI; and George de
Mohrenschildt, a White Russian leader who allegedly committed
suicide on the eve of his scheduled appearance before the Flouse
Assassination Panel. The day of his death he was interviewed by
journalist Edward Jay Epstein, a self-admitted ghost writer and
stringer for former Central Intelligence Agency counterintelli¬
gence director James Jesus Angleton. (46)

No discussion of Permindex, Division Five, or Major L.M.

Bloomfield would be complete without a note on the controversial
Mr. Angleton. This is not the time to reach any verdict on

Angleton's place in the international hall of fame of assassins,

dope pushers, and spies. We merely note a fantastic coincidence
of facts. As head of counterintelligence for the CIA for nearly 30
years, Angleton was the official in charge of all activities relating
to terrorism, assassinations, and international narcotics traffic.
As the head of the Israeli Desk, he was also the liaison chief to the
Mossad. Among his other responsibilities at the CIA, Angleton
ran the Vatican desk, a position that placed him equally in touch
with the Flouse of Savoy. This last connection would have been
solidified way back in the 1940s when Angleton was the OSS
station chief for Italy, and therefore the officer in charge of OSS
special agent Charles "Lucky" Luciano.

In short, Permindex's roster of directors and associates makes
a mockery of everything the Zionist Lobby professes to stand for.
The Montefiores, the de Flirschs, the Rothschilds, and their Bronf¬
man and Bloomfield retainers are at once the most zealous
leaders of the Zionist Lobby and the sponsors and controllers of a
criminal network that extends to self-professed Nazis. It is time
to bring before the courts the persons of Louis Bloomfield, Tibor
Rosenbaum, the directors of Bank Leumi, of Bank Hapoalim, of
B'nai B'rith International, of the Histradrut. Among the long list
of indictments, one of the charges would be violation of the

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DOPE, INC.

Nuremberg statutes for crimes against humanity — for deploy¬
ing drug-runners and convicted Nazis for assassinations of world¬
shaking importance. Before the Zionist Lobby shouts "anti-Semi¬
tism," it must explain the composition and directorate of
Permindex, which exposes once and for all the real controllers of
the Nazi "Black" International.

_A

Permindex Unveiled:
Resorts International
-Intertel

In September, 1974 less than four weeks after President

Richard Nixon was driven out of office, Evelyn de Rothschild,
Walter Hesselbach, and a handful of others conspired to bring
down the Banque de Credit Internationale (1). The collapse
caused a momentary panic on the international financial

markets and more longterm financial problems for such people
as Nixon and Michele Sindona, the Italian banker, whose poor
judgment led them to place their money in the hands of IOS. Did
this financial catastrophe spell the end of Permindex? After all,

BCI had been one of the centerpieces of the dirty money side of
Major Bloomfield's assassination bureau.

Not only did the International Assassination Bureau survive
the September 1974 events, and the earlier shunting of Permin¬
dex to South Africa. Pulling the plug on the BCI appears to have
been a loud diversionary maneuver to obscure the fact that
quietly, systematically, over a period of years, the Permindex
capability was upgraded, expanded, and relocated to a spot only

miles off the coast of the United States: Paradise Island in the
Grand Bahamas. Here stands the corporate headquarters of

321

322

DOPE, INC.

Resorts International and its wholly owned subsidiary "security
division. International Intelligence ("Intertel").

Forget about the pictures of Resorts International in glossy
travel brochures or the advertisements in the Travel Section of
the Sunday New York Times. Scarcely concealed among the
palm trees, the swimming pools, and the all-night casinos and
nightclubs is Major Bloomfield's Royal Commission of High Exe¬
cutioners — and billions of dollars in dope. Barely hidden behind
the Resorts International letterhead is the eminence grise of
organized crime, Meyer Lansky.

Beginning no later than 1960, Lansky hatched a grand scheme
to create a "Hong Kong West" (2) in the Caribbean: an offshore
center that would bring together gambling, narcotics, dirty
money, and Murder Inc. under one unregulated and "highly
respectable" roof.

First, Lansky picked the Grand Bahamas Island as the site for
a plush casino-resort. Operating through a Canadian "cutout,"
longtime business associate Louis Chesler, Lansky negotiated a
purchase of a large tract of land on the island and oversaw the
construction of a grand hotel, the Lucayan Beach Hotel, which
was completed and opened for business before the end of 1963. (3)
At the time the venture began, casino gambling was illegal in the
Grand Bahamas — except for those hotels that received a Certifi¬
cate of Exemption from the Bahamian government. The most
powerful political figure on the island, chief of the so-called "Bay
Street Boys," was Sir Stafford Sands. Several meetings between
Sands and Chesler and $1,800,000 in bribery later, Lansky re¬
ceived his Certificate of Exemption on March 27, 1963. On
January 22,1964, the casino at Lucayan Beach was opened under
festive circumstances that Hank Messick described as follows:

The international jetset was on hand to give the event
some class, but Meyer Lansky's veterans were in complete
control. Red Ritter was general manager; Max Courtney
was credit manager; Charley Brudner was his assistant;
Dino Cellini was supervisor, and so on. As a matter of fact,
Dino had operated a school in London to train the dealers
and stick men who came originally from Sicily by way of
the syndicate casino on the Isle of Man in the Irish Sea. (4)

ORGANIZED CRIME

323

Phase One of Lansky's "Operation Respectable" completed,

the old wizard proceeded with the next steps. First, he cleared

the way for a consortium of "legitimate" investors headed by the

Miami-based Mary Carter Paint Company to buy into Hog Island
(renamed Paradise Island by its owner Huntington Hartford, the
multimillionaire magnate of the Great Atlantic and Pacific Tea
Company) and to receive a Certificate of Exemption for the con¬
struction of a hotel-gambling casino. Sir Stafford Sands, now in

Lansky's hip pocket, saw these measures through and simul¬
taneously announced that the Bahamian government was under¬
taking the construction of a bridge connecting Grand Bahamas to
Hog Island, to be completed by December 31,1967. (5)

What sort of weird entity was Mary Carter Paints and why had
Meyer Lansky gone out of his way to open all the doors on Bay
Street to it?

To begin with the obvious, Mary Carter Paint Company was in¬
volved in more than wall coverings. In 1958, it was effectively
taken over by merger with the Crosby-Miller Co. — a Florida
company about which little is known except that former New
York Governor and two-time Republican presidential candidate
Thomas Dewey was one of its biggest investors. (6) Dewey's
"Mr. Clean" crimebuster reputation, dating back to his days as
special prosecutor during the 1940s, was a perfect cover for
Lansky's move to Paradise Island.

Via the 1958 merger, the president of Mary Carter Paint
Company was James M. Crosby. Crosby's brother, Peter Crosby,
was a convicted stock swindler and a close business associate of
Dino Cellini. Cellini was the first lieutenant to Meyer Lansky and
was known as Florida's "connection" to Canadian heroin traf¬
ficker Guiseppi Cotroni. So even with Gov. Thomas Dewey's
Anglophile profile on the label of every can of Mary Carter Paint,
the product was severely tarnished by bigtime crime.

Fidel Castro's takeover of Cuba in 1959 had been a bitter pill for
the Lansky syndicate to swallow; however, it taught the old
wizard a valuable lesson: don't take politics for granted. Before
he socked tens of millions of dollars into his Grand Bahamas
dreamland, Lansky would make absolutely certain that he was
treading on solid political ground.

So, in 1964, Lansky arranged a small scandal centered around

324

DOPE, INC.

the sudden "revelation" that Lucayan Beach promoter Lou
Chesler had connections to organized crime boss Meyer Lansky!
Chesler left the island no doubt laughing all the way to the bank,
and Lansky became invisible.

Next, Lansky moved to overthrow the deeply entrenched and
corrupted Bay Street Boys (the "Batistas of the Bahamas") and
impose a new government committed to the public welfare of the
Bahamian population — as long as the welfare was provided by
revenues from lucrative gambling takes. Covertly, Lansky politi¬
cal operatives — often men like Big Mike McLaney, who had
been Lansky's bagman for payoffs to Cuban dictator Batista —
began to heavily bankroll the Progressive Liberal Party repre¬
senting the islands' black majority. (7)

At the same time, Lansky began releasing blackmail dossiers
on the Bay Street Boys. First, James Crosby went to the Justice
Department to meet with Robert Peloquin of the Organized
Crime Strike Force. Crosby clinched a deal with Peloquin (repre¬
senting Robert Kennedy's "secret team"). Shortly thereafter
Peloquin launched a full-scale investigation into "corruption in
the Grand Bahamas" — using the evidence provided through
Lansky. Another Lansky frontman, Tex McCrary, began leaking
material to the press. McCrary's leaks enabled the Wall Street
Journal to win the 1966 Pulitzer Prize for a lengthy series of
articles exposing the connections between organized crime and
the ruling political elite of the island — the Bay Streeters. (8)

Following the Crosby-Peloquin meeting, in 1965 the Internal
Revenue Service — in conjunction with the Organized Crime
section of the Justice Department — embarked on "Operation
Trade winds," ostensibly an investigation into "hot money" oper¬
ations in the Bahamas. Heading the IRS side of the investigation
was William Koler. Running the effort from the Justice Depart¬
ment was Robert Peloquin, working in close contact with Organ¬
ized Crime and Racketeering section head Henry Peterson and
Criminal Division head William Hundley.

By Christmas, 1966, growing scandals had presented the Bay
Street Boys with a fait accompli. They called for elections and, on
January 10, 1967, were driven out of office by the Progressive
Liberal Party. Progressive chairman Lynden O. Pindling

ORGANIZED CRIME

325

became Premier, and he petitioned for the convening of a Royal
Commission of Inquiry to handle the organized crime penetration
and control over Bay Street. The commission was convened in
February 1967 under the chairmanship of Sir Ranulph Bacon,
former head of Scotland Yard. Its investigation was based almost
exclusively on the Lansky dossiers, which were passed on to Sir
Ranulph by the Operation Tradewinds crew. (9)

By March 1967, all competitors with Mary Carter Paint
Company had withdrawn their bids on the Hog Island land in fear
that they would be exposed for their corrupt ties to Bay Street.
Before the end of the month. Sir Stafford Sands packed his bags
and retired to a castle in Spain.

Lansky, as the business agent for Dope, Incorporated, had
completed a most silent coup d'etat. In rapid succession, all the

rats surfaced to claim their just rewards.

Peloquin and Hundley "retired" from the Justice Department,
opened up a law firm, and within a month were retained to

manage the legal affairs of "Resorts International" — the new
name adopted by Mary Carter Paints in 1966 when it made the bid
for Hog Island. Both men became vice presidents of Paradise
Enterprise, Inc., the Resorts International subsidiary that owns
the island. By 1970, Resorts had created a wholly owned subsidi¬
ary private security army, lntertel. Its cofounders (who started
off with a $2,000,000 commission from Resorts) were Peloquin,
who became president, and Hundley, who became the secretary
and the general counsel. Their initial recruits were drawn princi¬
pally from the Operation Tradewinds taskforce, beginning with
former IRS Intelligence Division head Koler. What Permindex

had previously done under a shroud of secrecy and multiple
layers of cover, lntertel was set up to do on a grand scale —

before the public eye under the cover of crime control!

Before we look at lntertel and its personnel, more closely, it is
important to set a few things straight about the investment
capital that went into the construction of Resorts International.

Resorts International was financed largely with a transfer of
funds from the Banque de Credit Internationale of Tibor Rosen¬
baum and Major Louis Mortimer Bloomfield, and the Investors
Overseas Service of Bernie Cornfeld and the Rothschild family.

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DOPE, INC.

An estimated $14 million in transferred monies traveling through
Meyer Lansky's World Trade Bank and the Fiduciary Trust
Company of Nassau, a wholly owned subsidiary of IOS, found
their way into Resorts during its half-dozen formative years. (10)

Furthermore, by the agreement that first cleared the way for
the granting of the property title, the construction rights, and the
vital Certificate of Exemption, 44 cents on every dollar of profit
taken in at the Paradise Island casino goes to the Lucayan Beach
Hotel and Casino Corporation — still largely owned by Meyer
Lansky through his Canadian business partner Lou Chesler.

From its investors' side then. Resorts International is indis¬
tinguishable from the previously Geneva and Basel-head-
quartered Permindex-BCI-IOS — a nexus that we have shown to
be founded on the revenues of Dope, Incorporated. Resorts Inter¬
national equals bigtime drug trafficking: cocaine and marijuana
from the Caribbean and South America, LSD and hashish pro¬
duced in factories in the Bahamas, Costa Rica, etc., with venture
capital provided through IOS. Resorts International's stationing
on Paradise Island created the "Silver Triangle" — a dope route
up through the Caribbean that the U.S. Drug Enforcement
Administration estimates to be the source of over $7 billion a year
alone in narcotics passed through the southernmost tip of
Florida.

Perm index moves to Bay Street

As the guts of BCI moved to Paradise Island, so the Permindex
murder ring moved to lntertel. No longer was the Special Oper¬
ations Executive to house its secret assassination teams in
trading companies, Christian missionary schools, and commer¬
cial executive airline services. Murder, Inc. was to become part
of the respectable, Kennedy "liberal establishment," flaunting
itself as a private intelligence army for hire.

Of course, occasionally old methods of cover were demanded
when inquiring reporters, grand juries, or congressional com¬
mittees threatened to come a bit too close to the truth. Thus,
when lntertel was brought before the Senate Watergate Com¬
mittee for possible investigation, it was officially described as a

ORGANIZED CRIME

327

"commercial firm that specialized in the identification of type¬
writers." (11)

What is International Intelligence? A "Who's Who" listing of
its board and senior staff reads like a printout of British intel¬
ligence, the Mafia, and Mossad.

Intertel President Robert Peloquin was a troubleshooter on the
Kennedy Justice "secret team" under Walter Sheridan. A World
War II naval intelligence officer assigned to the Office of Naval
Intelligence, Peloquin was transferred to the National Security
Agency where he remained until moving to the criminal division
of the Justice Department. In 1966, Peloquin was sent to Buffalo
to head up the first official Organized Crime Strike Force in the
country. Peloquin's "no crime here" coverup of the Jacobs
family syndicate (see Section 5) was so well received that his
boss, Henry Peterson, was gratefully hired as general counsel for
the Jacobs' Sportsystems Corporation and let loose with a $1
million annual budget. Hundley and Peloquin run Intertel; Peter¬
son runs Sportsystems; all three have been partners in the same
law firm since 1976.

Hundley, the secretary and general counsel for Intertel, spent
the 1951-57 years in the Internal Security section of the Justice
Department. In that capacity, Hundley would have based with
the Division Five of the FBI headed by Permindex's Major Louis
Mortimer Bloomfield. From Internal Security, Hundley moved
onto the Kennedy Justice "secret team" and participated in the
prosecution of Teamster President James Hoffa.

Sir Ranulph Bacon, the former head of Scotland Yard who con¬
ducted the Royal Commission inquiry that cleaned out the Bay
Street Boys for Lansky, cashed in his chips by moving on to the
Intertel board.

John D. O'Connell is the executive vice-president of Intertel in
charge of its New York City operations. A 24-year veteran of the
FBI, O'Connell was the supervisor of all FBI intelligence activi¬
ties related to organized crime.

Thomas J. McKeon, vice-president and assistant general
counsel, was a supervisor with Major Bloomfield's FBI Division
Five before he went to Detroit to head up the Organized Crime
Strike Force.

David Belisle, a member of the board, was the Deputy Director

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DOPE, INC.

for Security at the State Department and subsequently the head
of the Security section of the National Security Agency.

Edward M. Mullin, presently Intertel's director of intelligence
operations, was with Division Five of the FBI and later with the
CIA as an assistant deputy director in charge of clandestine ser¬
vices. Mullin's private security front in Washington, D.C., was in¬
famous as the base of operations for E. Howard Hunt during the
time of the Watergate breakin. Mullin is also directly tied into the
Miami Double-Chek outfit that is implicated in several Permin-
dex-run assassinations, including the JFK killing.

Among the other board members and ranking staff of Intertel
are: a retired director of the Royal Canadian Mounted Police; a
president of the Bronfman family's Royal Bank of Canada Trust
Company; a president of the Dreyfus Corporation, an investment
fund owned by the Hofjuden de Gunzberg family, into which the
Bronfmans are intermarried.

What do we have here? First we have Resorts International,
financed through the Geneva-Basel retail revenues of Dope, Inc.
The manager of Paradise Island for its first half decade of opera¬
tion (1968-73) was Eddie Cellini, the brother of Dino Cellini and
another well-known lieutenant of Meyer Fansky. (When Cellini's
criminal record became a potential sore spot for Resorts, he was
discreetly shipped off to Miami where he now handles "charter
flights" between Florida and Paradise Island — flights that may
shuttle more than paying customers.) In 1972, Robert Vesco
came a hairsbreadth away from buying majority holdings in
Resorts International for $60 million — a transaction that was
heartily endorsed by the "supersleuths" at Intertel. (12)

If Resorts International is a glossy front for Meyer Fansky's
retail end of the biggest business in the world then what does that
say for its wholly owned subsidiary, Intertel? Is it conceivable
that this collection of senior officials from the most prestigious
and sophisticated intelligence services of the United States,
Canada, and Britain could be oblivious to the fact that they are
"riding shotgun" for one of the biggest channels of narcotics and
hot money in the Western Hemisphere?

Intertel stands exposed as the successor to Major Bloomfield's
Permindex, drawing on the same SOE-Division Five capabilities.

ORGANIZED CRIME

329

the same "direct line" interface into the official intelligence
branches of half the countries in the world, the same allegiance to
the British oligarchy behind the $200 billion a year Dope, Inc.
While the motives may vary case by case, it is sufficient to say
that anyone on the inside of Intertel attempting to break from its
service and spill the beans would have about the same chance for
survival as a Royal Hong Kong police officer who decided to turn
down his weekly bribery envelope.

With the consolidation of Resorts International, we once again
swing full circle. From a Prohibition-era jumping-off point of
syndicated organized crime in the United States — fostered by
the same British families that had ordered the Shanghai
massacre to safeguard the rule of Dope, Inc. in China — we now
find ourselves 50 years later confronted by a criminal infra¬
structure lobbying for the decriminalization of crime itself! The
Kennedy Justice, Scotland Yard, and RCMP boys at Intertel sell
their services as "experts in cleaning out undesirable criminal
elements from your corporation." (13) Through this ruse they
captured the Howard Hughes fortunes and are at present taking
over "security services" for all the big Las Vegas casinos. (14)
They moved into New Jersey and imposed gambling,
horse racing, and numbers as the three "growth industries";
they are now posing New Jersey as the model to be followed by
Florida, Arizona, Rhode Island, Massachusetts, and New York.

After World War II, one of the economic warfare specialists in
Sir William Stephenson's SOE, a fellow named Ian Fleming,
wrote a series of coded novels describing the efforts at world
conquest of a "third force" — an ultramodern international
crime syndicate housed in the resort islands of the Caribbean.
The weapons of "third force" conquest were drugs, political
assassinations, grand-scale blackmail, and economic war
against the nations of the world. With Resorts International-
lntertel, Fleming's "third force" — the British oligarchy's Dope,
Inc. — put itself up for trade on the stock markets of the world.

5

The Jacobs Family's
Emprise: Sports and Crime

On June 2, 1976, moments after a bomb exploded in his car and
inflicted fatal injuries, dying Arizona investigative reporter Don
Bolles whispered three words to the rescue team that pulled him
from the wreckage: "Mafia . . . Emprise . . . Adamson."

Bolles was on the verge of completing a seven-year investiga¬
tion of laundered drug traffic money in the state of Arizona,
including organized crime takeovers of dog tracks and horse
racing—areas the Buffalo-based Jacobs family began moving
into in 1959. A Phoenix resident, John Adamson, pleaded guilty to
the murder in January 1977, naming a local real estate developer.
Max Dunlop, as the man who hired him to murder Bolles.
Mysteriously, no investigation ever took place of Emprise, the
leading vehicle since 1916 of the Jacobs family, which had been
the primary target of Bolles's investigation and the subject of his
last words.

Emprise was one of the largest nonpublic, family-owned
corporations in the world, a conglomerate with control or partial
control over 450 separate companies. Its stated annual profit is
$350 million, from holdings in North American and British

330

ORGANIZED CRIME

331

sports complexes, race tracks, and food consortia. It is probably
the biggest quasi-legitimate cover for organized crime's money
laundering in the United States. Were it a public company, it
would rank about 150 in the Fortune 500.

The Jacobs family's only concession to the numerous attempts
by law enforcement agencies to shut them down was to change
Emprise's name to Sportsystems in 1972.

The vast extent of the present Jacobs empire is approximated
by Sportsystems' 1977 declared holdings. The pattern that
emerges conforms to the requisites of an international launder¬
ing racket for narcotics, prostitution, and gambling receipts.

Sportsystems Corporation maintains:

*majority interest or significant minority interests in over 20
horse racing tracks in the United States and Canada;

*food concessions at over 40 horse racing tracks in the United
States and Canada plus another 15 in England. Those in Great
Britain are maintained in the name of Sportsystems’ wholly
owned subsidiary, Letheby and Christopher Ltd., chaired by a
retired British Army colonel, Livingstone Learmouth;

*over ten greyhound racing tracks in the United States and
Canada, including majority holdings in nearly every track in the
heavily drug-trafficked state of Arizona;

*24 concession contracts with major-league baseball teams in
the United States, including Chicago's Comiskey Park and
Detroit's Tiger Stadium;

*ownership of the Boston Garden indoor professional sports
complex and the Boston Bruins professional ice hockey team;

*ownership of Professional Sports Publications, Inc., the
largest U.S. publisher of sports events programs;

*161 concessions at theaters and bowling alleys in the United
States;

*15 airport concessions, including in-flight and ground-level
concessions at Washington, D.C. airports and Palm Springs,
Florida;

*two jai alai stadiums (legal gambling facilities) in Florida;
industrial food catering services at such locations as the Gulf
of Mexico oil drilling platforms; and

*one Alaska-to-Seattle cargo fleet comprised of six ships. This

332

DOPE, INC.

route curiously parallels the prime entry point to the U.S. of
Chinese heroin.

Within this maze of operations, each characterized by a high
volume of cash turnover, the $350 million figure is a fraud, pub¬
lished for tax purposes. Law enforcement sources estimate the
annual flowthrough of tainted cash in the range of several billions
of dollars.

That is not conjecture. Emprise and its incarnation. Sport-
systems, left a broad trail of investigations, indictments, and con¬
victions, occurring mainly during the years of Nixon's War on
Drugs—a trail that ended with the Bolles murder. In 1972, the
family firm was convicted of conspiracy to take over a gambling
casino in Las Vegas by illegal means. That incident, among other
things, provoked the change of the Emprise name. Indicted along
with the Jacobs brothers were some of the best-known faces in
the mug files of the Justice Department's Organized Crime
Strike Force. Among the co-conspirators were top racketeers,
drug traffickers, and the entire leadership of the Detroit mob,
including

*Anthony Zerilli, son of Joseph Zerilli, Detroit's mob boss and
an official of the Emprise subsidiary. Hazel Park Racing
Association;

* Michael B. Polizzi of Grosse Point, Michigan, an owner of the
Valley Die Cast Association, identified as a Detroit mob lieu¬
tenant in police files;

*Anthony Giordano of the "St. Louis Banana Distributing
Company," the kingpin of St. Louis drug traffic;

* Peter J. Bellanca, also a director of the Emprise-owned Hazel
Park Racing Association; and

*Jacob Shapiro, a Detroit-Miami mobster, with interests in Las
Vegas' Silver Slipper casino.

Conviction in the same dock with known mobsters
did not deter the Jacobs family. Since 1972, they have con¬
tinued to act as money-movers and bagmen for a whole list of
organized crime figures. Several large loans to crime syndicates
are on the record, including a $2 million 1972 loan to the Montreal
Expos—owned by their old sponsors and counterparts across the
Canadian border, the Bronfman family of Montreal. An earl-

ORGANIZED CRIME

333

ier recipient was convicted murderer Raymond Patriarcha,
the crime boss of Rhode Island. Louis Jacobs, one of the three
brothers, brought Patriarcha into a partnership in the Chicago
Lion Manufacturing Company, since renamed the Bally Manu¬
facturing company, the largest American producer of pinball and
slot machines and the source of supply for the mob's pinball
distribution. Also on the list of the Jacobs' "loan" recipients are a
number of associates of syndicate financier Meyer Lansky,
including Morris Dalitz, according to testimony introduced into
the Congressional Record (1).

A Michigan grand jury is currently hearing a case implicating
the Jacobs' Sportsystems and the Jacobs brothers personally in
an attempt to tamper with Michigan state criminal records
involving members of the Zerilli mob and St. Louis crime figure
Morris Shenker.

Despite a record of criminal activity stretching back to the
1910s—and never interrupted—the Jacobs family remains one of
the open, "legitimate" fronts for Dope, Incorporated. Not only is

the Jacobs family protected, but, as we will document below, it
retains a group of veterans of the Kennedy Administration's

Organized Crime Strike Force as its legal department.

Emprise appeared in 1916, the year that the Bronfmans and the
Hudson's Bay Company began bootlegging through the "Pure
Drug Distribution Company," using the three Jacobs brothers as
contacts right across the border in Buffalo. The original Jacobs
brothers, Louis, Marvin, and Charles, used the old smugglers'
cover of "food concessions" for a chain of vaudeville theaters on
the Canadian border crossing points at Buffalo and Cleve¬

land. (2) The modus operandi is pretty much the one Mitchell
Bronfman used during the early 1970s for smuggling heroin into

the United States. Once established, the Jacobs machine became
a leading distributor for Bronfman liquor as the United States
went dry.

Functionally, Emprise represented the "throttle" through
which shipments of liquor could be turned on or off to the
American mob. The Jacobs family, enduring a half-dozen crim¬
inal indictments through the 1920s, controlled the supply and
financing of illegal booze for most of American organized crime.

334

DOPE, INC.

Their dependents included the Purple Gang of Detroit, the gang
convicted with the Jacobs brothers in the 1972 Las Vegas
incident; the Morris Dalitz Cleveland-Las Vegas crime syndi¬
cate: and the Crown-Lundheimer mob in Chicago, the Zionist
controllers of the colorful "cutout" A1 Capone. (3) Not only are
these ties still in place; every man who tried to do something
about them is either dead, like reporter Don Bolles, or broken,
like former Arizona Congressman Sam Steiger.

The Steiger investigation

Beginning in 1970, five-term Arizona conservative Congress¬
man Sam Steiger began an investigation into Emprise's activ¬
ities in his home state. Working closely with Bolles, Steiger
prepared a series of reports for the House Select Committee on
Crime, of which he was a member. Steiger placed two damning
reports on Emprise in the Congressional Record in 1970 and
1972 (4). He also widely publicized the finding of an Arizona State
Auditor General report charging Emprise with falsifying figures
to get a tax-break bill through the State Legislature. By 1972, in
conjunction with the Nixon Justice Department, he succeeded in
getting grand jury charges and federal court convictions against
Emprise and the six Detroit area mobsters already cited. On
May 24, 1972, pressure on Emprise had reached such a public
crescendo that even Sports Illustrated ran a lengthy expose titled
"Jacobs — Godfather of Sports"; the magazine was promptly
sued for $20 million and settled out of court.

At that point. Democratic Party politicians and prominent
figures in the Zionist Lobby went into action on Emprise's behalf.
Not coincidentally, the same forces that came forward for
Emprise were also preparing the Watergate scandal to bring
down President Richard Nixon. (5)

Democratic members of the House Select Panel on Crime
denounced the majority report prepared by Steiger exposing
Emprise's ties to organized crime. As admitted by Max and
Jeremy Jacobs in congressional testimony. Emprise hired New
York public relations man Hal Antin to defeat Steiger in his 1976

ORGANIZED CRIME

335

re-election bid. A Phoenix underworld figure, George H.
Johnson, was paid to wiretap and survey Steiger and manufac¬
ture scandals against him. Arnold Weiss, a Buffalo attorney on
the Emprise payroll, was sent to meet with Steiger and deliver a
series of ultimatums. Weiss reportedly threatened to ruin Steiger
by planting rumors that his marriage had broken up after his wife
caught him in illicit relations with their three-year-old daughter.
Such rumors, in fact, did appear in various Arizona media. (6)

In 1972, Senator Robert Dole, a Kansas Republican, publicly
protested the House Select Panel's decision to terminate the

hearings on Emprise. Dole revealed that the decision had

followed a private meeting between Jeremy Jacobs and Demo¬
cratic National Committee Chairman Larry O'Brien. O'Brien

subsequently left his Democratic Party post and assumed a
lucrative job as president of the National Basketball Associ¬

ation—an organization with heavy representation by the Jacobs
family.

As the Watergate campaign broke down Nixon's resistance and
dismantled the core of his efforts to suppress organized crime,
the attack against Emprise faded. By June 1976, Don Bolles was
dead. On November 3, 1976, in an election heavily shaped by
nationwide vote fraud (7), Rep. Steiger lost his bid for a sixth
term in Congress. By this time a broken man fearing for his life,
Steiger met with Jeremy Jacobs to "apologize" for his accusa¬
tions against Emprise. At this time Emprise-Sportsystems had
three pending civil suits against Steiger. In a last act of
humiliation, Steiger wrote to Attorney General Edward Levi as a
spokesman for Emprise on behalf of a presidential pardon for the
1972 federal racketeering conviction. Incoming Attorney General
Griffin Bell turned down the request as "not deserving." (8)

Jacobs and Royal Crown

The second generation of Jacobs brothers. Max, Jeremy, and
Lawrence, underwent the same "washing" into respectable
society as their old Prohibition business partners, the
Bronfmans. Ironically, the Jacobs brothers used their longstand-

336

DOPE, INC.

ing association with the Bronfmans, since married into the upper
reaches of the European Hofjuden, to lend them an air of respect¬
ability somewhat above that of the outright thugs with whom they
still do most of their business. For example, a third-generation
Jacobs, Jeremy, took his "higher education" not at a university,
but at the Toronto Jockey Club, after his 1960 high school
graduation. The Bronfman-run Toronto Jockey Club, like its
counterpart in Hong Kong, is not only one of Canada's best
protected dirty money-gathering outfits, but a place where
Hofjuden and gangsters can amiably mix in safety. Regular
denizens of the Toronto Club include Viscount Hardinge and
Canadian organized-crime figure Murray Koffler. Koffler's role
as a retail outlet for Bronfman dope-running came into the public
domain in 1976, when an associate's chain of retail drug stores
was indicted for maintaining an amphetamine factory and a
national army of pill-pushers. That distinction did not prevent
Koffler from attending the wedding of Britain's Princess Anne,

or from maintaining his close friendship with Anne's husband.
Captain Mark Phillips. (9)

So far the Jacobs have been barred from marriage into the
leading Hofjuden circles. However, the Jacobs have been
awarded a respectable role in the train of the British monarchy,
in a service capacity. The "crown jewel" of the Jacobs' opera¬
tions is the British firm, Letheby and Christopher Ltd.—the

caterers, by Her Majesty's appointment, to "all events with a

royal presence." (10) Their concessions through Letheby and
Christopher include the Tate Gallery, the Ascot Races, and other
gathering places of the Royal Family and the British aristocracy.
L & C, as it is affectionately known in Britain, was awarded the
management of Ascot through the Bank of Norfolk, whose
trustees include the Marquis of Abergavemy and Lord
Tyron—the Keeper of the Queen's Privy Purse, third in aristo¬
cratic rank to the Keeper of the Queen's Horse, and the Keeper of
the Queen's Bedchamber.

Apart from its royal honors, the Jacobs subsidiary manages 12
other racetracks in Great Britain including the national track at
Liverpool, the site of the Grand National, and Wembly Stadium,
Britain's equivalent of Madison Square Garden.

ORGANIZED CRIME

337

More than their retailing services for British dope-peddlers,

however, accounts for the Jacobs family's honored position at the
British court. They have conducted crucial—and danger¬
ous—political errands for the British oligarchy over a period of
years. One such mission involved the successful sabotage of
Richard Nixon's 1972 plan for detente with the Soviet Union.
Their instrument for the act of sabotage—the man whose
presidential campaign they funded lavishly—was Senator Scoop
Jackson.

"Scoopsie," Max Jacobs once said, "is the best friend Israel

has in the Congress." Max and brother Jeremy were funders of
their torpedo's run for the White House. (11)

Jackson authored the "Jackson-Vanik" Amendment to destroy
the effectiveness of Nixon's 1972 treaty for expanded trade and
scientific cooperation, which rested, among other things, on
American credits for Siberian development. Jackson's operation
prevented the United States from extending any credits to the
Soviet Union until the Soviets "liberalized" their Jewish emigra¬
tion policy. (Under the Nixon Administration, such emigration
had already increased fourfold.)

The Jacobs brothers had hamstrung a treaty the British Crown

viewed as a mortal enemy, one the Rothschild-owned London
Economist denounced as a "waltz of the elephants." Jackson has
continued to work as a pawn of the Jacobs crime family, advocat¬
ing, among other projects, a military alliance with and weapons

sales to China, Britain's partner in world dope traffic.

In the Jacobs group, America has its homegrown version of the
Green Gangs, the fifth column Britain used to destroy China.

Working for the HongShang

From available evidence, the British oligarchy rates the
Jacobs group's political usefulness as an intermediary for
control over organized crime sufficiently important to make
major efforts to rebuild the Jacobs' tarnished image. The prize
that motivates Britain in this regard is the Buffalo-based Marine

338

DOPE, INC.

Midland Bank, which the Hongkong and Shanghai Bank now
wants to buy out.

From the American side the most important "inside agents"
pushing the HongShang takeover are Leonard Rochwarger and
Paul Schoelkopf, since 1973 the closest business associates of
Max and Jermy Jacobs. (12) Rochwarger is president of First-
mark Corporation, a heavy equipment leasing company and the
American leg of an international conglomerate controlled by
Britain's most important Hofjuden, the Rothschilds and Sebag-
Montefiores.

Rochwarger was brought into the deal at a Paris meeting in
1971 with Edmond de Rothschild and Robin Sebag-Montefiore,
who represented, respectively, the Isrop S.A. of Luxembourg and
the Gilsyd Corporation of Liechtenstein. Under an intricate
merger arrangement, Rochwarger emerged from the meeting as
president of a new international subsidiary of the Rothschild and
Montefiore companies, Israel-American Leasing of Tel Aviv,
now the largest firm of its type in Israel.

Rochwarger is an old associate of Max Jacobs; both sit on the
board of the Joint Distribution Committee, the funding center for
American Zionist organizations. In addition, Rochwarger is the
director of the National Jewish Centers and Youth Programs
both in the United States and Canada, a regional board member
of the Anti-Defamation League of B'nai B'rith, and fundraising
chairman of the United Jewish Appeal.

Paul Schoelkopf, another Buffalo-based Zionist, is leading the
local campaign in support of HongShang's bid for Marine
Midland. Schoelkopf is chairman of Buffalo's Niagara Share
Corporation, an investment company that pools the resources of
wealthy local investors for large investments. Among Niagara's
holdings is 246,000 shares in HongShang stock. Its other holdings
include investments in the Swire family's Pacific A Corporation,
and 400,000 shares in two Hong Kong holding companies, Cheung
Kong Holdings Ltd., and the trading company Hutchinson
Whampoa, also linked to HongShang.

Another Schoelkopf investment vehicle is the $250 million per
year food wholesaling-retailing group, Niagara Frontier
Services, whose chairman is Armand Castellani, a member of
Marine Midland's board of directors. A merger is currently in

ORGANIZED CRIME

339

process between Niagara Frontier Services and Sportsystems,
which would double the stated "legitimate" revenue base of the
Jacobs family empire.

If HongShang receives the Marine Midland Bank from the
hands of Max Jacobs, the link between the retail cash laundering
facilities of the American mob and the wholesale financing of the
international dope traffic will be complete. As noted in Part II,
Section 1, it will also complete the British oligarchy's takeover of
the last remaining offshore center not wholly in its possession,
Panama.

Jacobs joins Intertel

In the aftermath of Congressman Steiger's investigation,
Sportsystems underwent a corporate personnel reorganization.
The result was that Sportsystems established an interface with
the center of the crime syndicates and the reincarnated Assas¬
sination Bureau—Resorts International and its subsidiary,
Intertel.

The entire executive team and legal staff brought into Sport¬
systems in 1975 was made up exclusively of veterans of the
Kennedy Justice Department—the same Kennedy Justice De¬
partment that sent the man who is now president of Intertel,
Robert Peloquin, to Buffalo, to "investigate" the Emprise crime
syndicate!

In early 1975, Donald Carmichael, a Kennedy Democrat who had
served as a delegate both at the 1964 and 1968 Democratic conven¬
tions, as well as on the President's War on Poverty panel, became
the president of Sportsystems. Carmichael ushered in a dozen
Kennedy Justice Department hands over the next two years.

In 1976, Max and Jeremy Jacobs' close friend and "business
associate" Max Fisher released the general counsel of his own
corporation. United Brands (formerly United Fruit), so that he
could accept Jacobs' offer of the post of general counsel to Sport¬
systems. Before his employment at United Brands, Stanley Mills
had been a Justice Department aide to Attorney General Robert
Kennedy. (13)

In 1977, when the Bolles murder temporarily threatened to

340

DOPE, INC.

bring Emprise-Sportsystems under criminal investigation,
Horace S. Webb joined the firm as public relations director.
Webb, who assisted the Watergating of Richard Nixon on behalf
of the Kennedy machine, had previously been Deputy Public
Information Director for the Justice Department and later press
secretary for Attorney General Elliot Richardson.

By the time the facelift of Sportsystems was finished, four
other Kennedy Administration officials—each a member of
Robert Kennedy's "secret team"—were brought into the firm's
legal division.

Half the Kennedy "old boys" had moved into Resorts
International and Intertel; the other half went over to the Jacobs
group, for the same type of assignment.

Heading the "Intertel Team" at Sportsystems is Henry
Peterson, the former chief of the Organized Crime and

Racketeering Division of the Kennedy Justice Department. At
Camelot, Peterson was the superior of Robert Peloquin, now
president of Intertel.

Peterson's entire staff from the old Robert Kennedy days came
with him. At Sportsystems, his chief aides are William Bittman,
Daniel Hollman, and Thomas Kennedy. Kennedy worked for
Peterson in the Organized Crime Division of the Department of
Justice. Their big assignment in the old days came when

Peterson sent them to New York State—to investigate the mob
connections of Emprise!

"Bagman" Max Fisher

Max Fisher, today the chairman of United Brands, is the

acknowledged "kingmaker" in the Michigan Republican Party,
and a political power nationally. As president of the United
Jewish Appeal, president of the Jewish Welfare Fund, and honor¬
ary chairman of the American Jewish Committee, Fisher holds
rank next to his close friends Max and Jeremy Jacobs and the
Bronfman brothers as one of the leading lights of the Zionist
Lobby in North America. Fisher is also Henry Kissinger's

contact man in the Michigan-Ohio area, and until recently was
national fundraising chairman for the Republican Party.

ORGANIZED CRIME

341

Those are impressive credentials for a man who got his start as
"bagman" for Prohibition's "Purple Gang." Max's job was to

run advance payments for Bronfman liquor across the Canadian
border and secure advance deliveries of Bronfman "rotgut" to
the speakeasies that dotted Michigan's auto towns. Today, Max's
headquarters, the Fisher Building, is owned by the Bronfmans.

Today Midwest law enforcement officials name Max Fisher as
the prime candidate for arrest and conviction as the kingpin of
the vast narcotics trade in the Midwest—including the tons of
drugs that pour into the auto belt. Yet no indictments have been
forthcoming. Freuhauf Trucking Company, based in both
Canada and the United States, provides one channel for large-
scale drug smuggling, these officials report. Max Fisher is a
Freuhauf board member and large shareholder. Knowledge of
Fisher's drug connection even includes the various parking lot
"truck stops" — adjacent to Fisher's Detroit suburban head¬

quarters — that are believed to serve as transshipment points for
heroin, cocaine, and marijuana. Fisher's privately owned
Marathon Oil Company, barging crude oil into the Midwest from
ports of call in South America, is also suspected of joining
Fisher's United Brands in running the "Silver Triangle" drug
traffic.

Since its founding by the New Orleans Macheca mob and
Montefiore-sponsored Jewish immigrant Zemurray, United
Fruit-United Brands has dominated both licit and illicit trade in
the Central and Latin American countries that produce cocaine
and marijuana for the American market. In those same coun¬
tries, the Israeli financial and intelligence networks identified

earlier with the narcotics traffic have become the principal

supplier of weapons. In Central America and in Chile, Israel has
replaced the U.S. as the leading arms merchant for United
Brands' "banana republic" governments. (14)

That none of the evidence has brought action against Fisher
raises some interesting questions about who controls Michigan
politics. Fisher, as noted, is not only the powerbroker for the
Republican Party, but along with the Socialist International
affiliate, the United Auto Workers (UAW), is on top of the ghetto
and in-plant crime machine and Maoist-environmentalist gangs
that push drugs and terrorism. This was the conclusion drawn

342

DOPE, INC.

from an investigation involving federal law enforcement officials
after a July 1978 attempted assassination of U.S. Labor Party
Chairman Lyndon LaRouche in Detroit.

The "political cover" under which drugs and terror find their
way into the floors of the auto plants is the Communist Labor
Party of Michigan. This avowedly Maoist grouplet is an out¬
growth of the nest of agents provocateurs who incited the late
1960s riots that left large sections of Detroit's working class dis¬
tricts in ruins. After the riots, Max Fisher and then-UAW Pres¬
ident Leonard Woodcock (now U.S. Emissary to the People's
Republic of China) stepped in to found the New Detroit Corpora¬
tion as the "reforming" de facto ruling body over the region. New
Detroit outflanked the constituency political machine in the city
administration and police department, removing the chief
impediment to the "liberal" proliferation of drugs, vote fraud,
and fingertip-controlled political violence. The Communist Labor
Party of Michigan provides the footsoldiers for all three.

According to records on file with Detroit City Clerk, the
Communist Labor Party is financed by Max Fisher's Zionist
Lobby. Among the campaign contributors to its 1976 and 1978
"electoral campaigns" are Avern Cohen, Fisher's personal
attorney and his political lieutenant, and Richard Lobenthal, the
head of the Michigan Anti-Defamation League of B'nai B'rith.
The Communist Labor Party also gets money from a group
called the Anti-Nazi Coalition, in which it joins the B'nai B'rith,
and a Zionist umbrella group called the Jewish Community
Council. The latter is financed by numerous Zionist philan¬
thropies including the Jewish Welfare Fund, and by thousands of
dollars in UAW membership dues. (15) The Anti-Nazi Coalition
services a string of storefronts, bookstores, and other commer¬
cial enterprises that dish out dope to the auto plants and ghettos.

Dope, Inc. goes "legit"

The Jacobs family. Max Fisher, the Bronfman brothers: these
figures stand behind organized crime, the drug traffic, and the
systematic corruption of the political process in nearly every

ORGANIZED CRIME

343

precinct of the United States. A precise estimate cannot be given
of the percentage of the $200 billion of narcotics revenues
diverted into political corruption and disruption. But the nearly
$1 billion the Jacobs family put up to oust Congressman Sam
Steiger, the Bronfmans' multimillion dollar expenditure for
political and economic warfare against the U.S. Labor Party, and
the $1 million "war chest" that Resorts International assembled
to put across legalized casino gambling in New Jersey by legisla¬
tive fiat, provide sufficient warning that the sums spent on illeg¬
itimate political activities exceed those spent under the Federal
Election Law.

Corruption of politicians is more flagrant, more public, than
streetcorner soliciting by prostitutes. Take the case of St. Louis
Representative William Clay, now treasurer of the Black Caucus
in Congress. Clay was selected for his job by Morris Shenker, the
owner of the Dunes and Sands casinos in Las Vegas and the
attorney for Anthony Giordano in the 1972 federal case against
Emprise. (16) Clay's Black Caucus colleague Parren Mitchell of
Baltimore, who has emerged as a leading spokesman for drug de¬
criminalization, is another.

The roster of Britain's Green Gang thugs in the United States,
stretching down to every populated center, is too extensive to
bear further detail. The Jacobs, Bronfmans, Fishers have the
same modus operandi: understand it, and nothing about organ¬
ized crime elsewhere will be difficult to understand. Once this
operation is cracked, drug traffic and corruption in cities across
the country can be broken, assembly-line fashion.

Britain's agents of corruption are now beginning the final
phase of opium warfare against the United States, as the dope-
runners and money-launderers press for legalization of gambling
and drug addiction. Under the transparent lie that legalization
means the destruction of organized crime—rather than its en¬
thronement in the state capital—gambling has opened up in New
Jersey, under the aegis of Meyer Lansky's Resorts International
and Intertel. Dope, Incorporated is preparing, in effect, to take
its "rightful place" at the top of the Fortune 500. The American
Green Gangs are preparing the final "Shanghai Massacre" of the
American people.

DOPE, INC.

_6

The Philadelphia Story

A long trail of indictments, fines and press stories leads to one
of the most dramatic case histories of Dope, Incorporated, and to
Philadelphia, the City of Brotherly Love. Under the direction of
old Philadelphia Quaker families, whose roots in the opium
traffic go back to the first years after the American Revolution,

and with the cooperation of one of Britain's oldest opium-running
families, the Phiadelphia dope network can be charted from the
wholesale production of illicit drugs down to the gutter.

Tucked away in the towering Sun Oil building in downtown
Philadelphia are the small corporate headquarters of an obscure
firm known as Paco Pharmaceuticals. Paco has only one line of

business: it packages roughly two-thirds of the amphetamine

tablets sold in the United States, under contract from the old
Quaker pharmaceuticals companies in the Philadelphia area,
including Smith, Kline and French, Rohm and Haas, and
Pennwalt. It publishes no annual report or other information

concerning its activities, except for one crucial fact: it is owned
by Charterhouse Japhet, the present incarnation of the old
Japhet family opium interests. Paco is also the source of most of

344

ORGANIZED CRIME

345

the "leakage" of amphetamines into illicit channels in the United
States. (1)

Federal agencies have tried to crack down on the Paco nexus
for years, but have succeeded only in wrist-slapping its local
collaborators. The record of citations of the amphetamine
producers is lengthy. It includes:

*A $200,000 fine imposed in October 1977 by the Drug
Enforcement Administration on Pennwalt Pharmaceuticals,
after Pennwalt was convicted of 17 counts of questionable
practices in the production of medicines containing cocaine.

*A 1972 accusation against Pennwalt by the predecessor
organization of the Drug Enforcement Administration, the
Bureau of Narcotics and Dangerous Drugs, involving Pennwalt's
use of Mexican subsidiaries to provide illicit channels of drug
traffic in the United States with amphetamines. The BNDD
discovered major accounting discrepancies between the amounts
of amphetamine Pennwalt claimed it shipped to Mexico and the
amount of amphetamine that actually arrived in Mexico.

*A recent order by the Food and Drug Administration
compelling Pennwalt to close a warehouse housing opium, osten¬
sibly for manufacture into licit morphone under federal license,
due to "leakage" of the opium.

*In November 1976, CBS's "Sixty Minutes" news feature
program accused Pennwalt of marketing amphetamine-based
diet pills, with the deliberate objective of creating a "hooked"
market of dependent amphetamine users. Commentator Mike
Wallace cited a 1970 Pennwalt internal memorandum to
substantiate this allegation.

The hard evidence of illegal drug trafficking by the old-line
drug firms in amphetamines, and strong suspicion of similar
trafficking in cocaine and opium, is the starting point for a chain
of control that ends with the retail drug trade, terrorism, and
crime on the streets of Philadelphia, leading through individuals
in high positions in the city's top banks and "charitable"
foundations. A November 13, 1978, expose of the Philadelphia
Foundation in the Philadelphia Daily News brought to public
light the incriminating information that had, independently, been
gathered by a U.S. Labor Party investigative team.

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DOPE, INC.

One James Boudine, a director of Pennwalt Pharmaceuticals,
is the leading connection between the wholesale and street-level
sides of Philadelphia's narcotics traffic. Until 1977 he was
president of the First Pennsylvania Bank, in charge, among
other things, of its support of the Philadelphia Foundation.
Despite his departure from the president's suite, he remains on
the board of directors and continues to direct the bank's "chari¬
table" activities.

What First Pennsylvania's and other Philadelphia banks'
funds went for became clear in the summer of 1978, when a
member of a local leftist cult, known as "MOVE," killed a Phila¬
delphia policeman with an automatic rifle. Heavily oriented
towards drugs and terrorism, MOVE is part of a family of similar
groups that functions under the umbrella of the drug-oriented
Movement for a New Society, one of the ugliest concoctions ever
to appear on the streets of the United States. The Movement for a
New Society and its more explicitly violence-prone outlets, such
as MOVE, receive most of their funding from the Philadelphia
Foundation and two associated funding conduits for the Quaker

pharmaceuticals firm and the related Philadelphia banks. (3)

The other conduits are the William Penn Foundation, controlled
by the five members of the Haas pharmaceuticals family who sit
on the foundation's board, and by the Philadelphia Yearly
Meeting of the Religious Society of Friends (Quakers).

The Yearly Meeting is no more a religious Quaker institution
than Seagram Liquors or Emprise are religious Jewish institu¬
tions, but serves as a front for leading British-allied banking
and chemical companies of Quaker origin. The funds of

the Yearly Meeting are controlled by Robert Boudine—of the
same Boudine family—in two secret accounts held at James

Boudine's First Pennsylvania Bank, and shunted to undisclosed
activities. Among known contributions is a $2,000 donation
to the MOVE group, before the murder of the Philadelphia police¬
man attracted public attention. That contribution was only dis
covered after Philadelphia police moved in to clean out MOVE'S
headquarters, and discovered a receipt for $2,000 from the
Yearly Meeting of the Friends in MOVE'S quarters.

The Movement for a New Society is the biggest law

ORGANIZED CRIME

347

enforcement problem in the city of Philadelphia. Not only has it
produced killers like those from MOVE, but its combination of
pro-drug, pro-homosexuality, pro-pederasty, pro-environ¬
mentalist ideology provides an environment that breeds terror¬
ists. According to its own publications, the Movement for a New
Society provided the cadre who led the "Clamshell Alliance"
demonstration at New Hampshire's Seabrook nuclear reactor
site in 1977. New Hampshire police conducted mass arrests of the
demonstrators after receiving information that the demon¬
strators planned terrorist action.

This antisocial organization receives its funds from the pharm¬
aceutical firms and their bankers, through the Philadelphia
Foundation, the William Penn Foundation, and the Yearly
Meeting's $25 million secret slush fund. The William Penn
Foundation funds the Movement to the tune of $40,000 a year. The
foundation was established by Rohm and Haas. The Philadelphia
Foundation provided the Movement's funding conduit. Neighbor¬
hood Resources West, with $6,472 in recorded funds in 1977. That
foundation was founded under the auspices of officials of the
Fidelity Bank of Philadelphia Banking Corporation. On the
Fidelity Bank's board is John C. Haas of Rohm and Haas; its
chairman is Howard C. Petersen, who also sits on the board of
Rohm and Haas.

How little the operations of the Philadelphia Society of Friends
resemble the religious principles of Quakerism is evident from
one fact: their Philadelphia offices house the headquarters of 1)
the Venceremos Brigade, the mother organization for the terror¬
ist Weathermen; 2) the Susan Saxe Defense Committee, which
conducted legal efforts on behalf of Weatherwoman bank robber
Susan Saxe; and 3) the Puerto Rican Socialist Party, which offi¬
cially supports the terror-bombings of the so-called FAFN. The
"Religious Society of Friends" designation is a misnomer. The
Philadelphia Quakers operate through the American Friends
Service Committee, an organization that religious Quakers have
despised since its founding.

The American Friends Service Committee's spawn, the Move¬
ment for a New Society, funded through Quaker accounts, is
explicitly pro-violence. One of its publications, a 1976 pamphlet

348

DOPE, INC.

entitled "Moving Towards a New Society," says: "There are a
number, perhaps a growing number, of completely sincere
humanist revolutionaries who believe that violence is necessary,
although regrettable, and that only through armed struggle can
the powerful American Empire be toppled...it is important that
we express solidarity with all who share our goals," e.g. Susan
Saxe and the Venceremos Brigade.

The Quaker-funded Movement for a New Society also published
a series of frankly pornographic manuals for their "revolution¬
aries," including such titles as "Gay Oppression and
Liberation," "Liberating Sexuality," and "Take Heart—All
Those in the Struggle." These publications advocate pederasty,
"multiple sexual relationships," and public masturbation. One of
these publications, "Gay Oppression and Liberation," reports
that "non-gays in the Movement for a New Society have made
great strides recently in reducing their complicity with hetero¬
sexism." This is not only a breeding ground for the dope traffic
and terrorism, but an expression of the cult existence prescribed
by the original masters of the narcotics traffic (see Part IV). And
it is the bottom line for the William Penn and Philadelphia
Foundations.

Charterhouse Japhet's presence in the middle of this mid-
Atlantic zoo is the link back to the highest levels of Dope,
Incorporated, the queer alliance of Friends-who-are-not-Friends
and Jews-who-are-not-Jews. The leading Quaker banking
families in Philadelphia allied themselves with the Baring bank
and the dope traffic in the first years of the American Republic.
The top British banks include old Quaker families, who have been
represented in the United States for two centuries. Britain's
largest bank, Barclays, founded in its present form in 1835, has
been in Quaker hands for 200 years. Its representative David
Barclay lived in Philadelphia during the 18th century, at the
same time that the Baring Bank set up shop there. Barclays'
board, as noted earlier, includes five members of the Most
Venerable Order of St. lohn of Jerusalem, the chivalric dirty
tricks arm of the British and related monarchies.

Charterhouse Japhet today is controlled by Barclays Bank,
through an intermediary. Barclays controls Slough Properties,

ORGANIZED CRIME

349

which functions as the de facto parent organization of Charter-
house Japhet. Through its hold on the Japhet family interests,
Barclays controls Israeli finance, by way of Ernst Israel Japhet,
the chairman of Israel's largest finance house. Bank Leumi.
Bank Leumi has just applied to the American regulatory
authorities for permission to open a branch office in
Philadelphia.

Consequently, the joint appearance of "Quaker" and "Jewish"
financiers at the center of the Philadelphia Story is no accident.
Neither of them have anything more to do with the two religions
than does the Movement for a New Society's perverted gibberish.
Under the control of the British oligarchy and the Order of St.
John, they are the instruments of a British subversion plan in
Philadelphia that, in the words of the Movement for a New
Society's badly printed tract, wants to "topple the American
Empire."

350

DOPE, INC.

Notes

1. THE BRONFMAN GANG

1. Canadian Jewish Congress Report, 1967-68, in commemoration of
Samuel Bronfman.

2. Ibid.

3. Peter C. Newman, Bronfman Dynasty, The Rothschilds of the New
World (Toronto: McClelland and Stewart Ltd., 1978), pp. 66-73.

4. Newman, Bronfman Dynasty, p. 64.

5. Hank Messick, Lansky (New York: Berkley Medallion Books, 1971),
pp. 230-31.

6. James H. Gray, Booze (Toronto: Macmillan Co. of Canada, Alger
Press, 1972).

7. Newman, Bronfman Dynasty, p. 127.

8. Russell Sage Foundation, 1907-1946 (New York: Russell Sage Founda¬
tion, 1947), Volume L. Loanshark operation surveys were also conducted
in Illinois and Kentucky.

9. Hank Messick, Secret File (New York: G.P. Putnam's Sons, 1969),
pp. 277-78.

10. Torrio's rise to power has been chronicled in hundreds of books and
press accounts dealing with the history of organized crime and with the
"Capone" Chicago organization in particular. See Don Maclean,
Pictorial History of the Mafia (New York: Pyramid Books, 1974); Ralph
Salerno and John S. Tompkins, The Crime Confederation (New York:
Doubleday & Company, Inc., 1969); Martin A. Gosch and Richard
Hammer, The Last Testament of Lucky Luciano (New York: Dell
Publishing Co., Inc., 1974). Additional insight was provided through
numerous interviews with law enforcement officials at the U.S. Customs
Bureau and Drug Enforcement Administration.

11. Maclean, Pictorial History of the Mafia, p. 150; see also Donald R.
Cressey, Theft of the Nation: The Structure and Operations of Organized
Crime in America (New York: Harper and Row, 1969), pp. 29-53.

12. Maclean, Pictorial History of the Mafia, p. 461. Figures vary for the

death toll reached during the war period; however, on the night that New
York boss Salvatore Maranzano — September 11, 1931 — was

assassinated and the immediate 48-hour period following, it is estimated
that 40 gang leaders were killed in the overall purge. See also: Donald R.
Cressey, Theft of the Nation, pp. 29-53. and Peter Maas, The Valachi
Papers (New York: Bantam Books, 1968).

13. Messick. Secret File, pp. 96-97. Corroboration of the analysis
presented here was provided through numerous and exhaustive

ORGANIZED CRIME

351

interviews with law enforcement officials at the DEA and U.S. Customs
Bureau.

14. Messick. Lansky, pp. 90, 97-98. Additional corroboration was provided
by DEA officials in interviews in December 1977.

15. Report from Narcotics Division Agent Ralph Oyler to Narcotics
Division Chief Levi Nutt, March 30, 1926 (DEA Library, Washington,
D.C.).

16. Jonathan Marshall, "Opium and Politics of Gangsterism in Na¬
tionalist China—1927-45," Bulletin of Concerned Asian Scholars 3 (1976):
19-48.

17. Ibid.

18. Henry Aubin, Who Owns Montreal.

19. Ibid/

20. Newman, Bronfman Dynasty, pp. 55-61.

21. Starkman stores' connections to Koffler were widely publicized at the
time in the Toronto Globe and Mail.

22. See also Newman, Bronfman Dynasty, pp. 167-169.

23. The Washington Post, November 6,1978, p. 2.

24. Newman, Bronfman Dynasty, p. 233.

25. Ibid., p. 231.

26. Ibid., p. 225.

27. Ibid., p. 232.

28. Ibid., p. 227.

29. Ibid., p. 227.

2. THE KENNEDYS: ORGANIZED CRIME IN GOVERNMENT

1. Financial Campaign Report filed by the Kennedy for Re-Election

Committee, 1976, with the Clerk of the Senate.

2. Pictorial History of Mafia; see also Clark R. Mollenhoff, Strike Force:
Organized Crime and the Government (Englewood Cliffs, N.J.: Prentice-
Hall, Inc., 1972).

3. Senate Committee Hearings on Organized Crime and Narcotics, 1963.

4. Financial Campaign Report filed by the Kennedy for Re-Election

Committee, 1976.

5. David E. Koskoff, Joseph P. Kennedy: A Life and Times (Englewood

Cliffs, N.J.: Prentice-Hall, Inc., 1974), p. 9. Additional insight and
information on Kennedy was provided through interviews with law

enforcement officials.

6. Koskoff, Joseph P. Kennedy, p. 19.

7. Ibid., pp. 28,30.

8. Ibid., p. 28; see also William Stevenson, A Man Called Intrepid (New
York: Ballantine Books, 1976), p. 325.

9. Interview with DEA officials. December 1977; see also Messick. Secret
File, p. 197 and Koskoff, Joseph P. Kennedy, p. 53.

352

DOPE, INC.

10. Koskoff, Joseph P. Kennedy, p. 53.

11. Ibid., p. 115.

12. Ibid., pp. 166,394-95.

13. Ibid., p.378.

14. Sir John Wheeler-Bennett, Special Relationships: America in Peace
and War (New York: St. Martin, 1976), pp. 34-35; see also Koskoff,
Joseph P. Kennedy, pp. 403-4.

15. Wheeler-Bennett, Special Relationships, pp. 34-35.

16. Victor Navasky, Kennedy Justice (New York: Atheneum, 1970), p. 404.

17. Ibid.

18. Messick, Lansky, pp. 241-42. This viewpoint was also shared by
numerous law enforcement officials who were interviewed in the course
of researching the history of organized crime.

19. Who's Who in Canada.

20. Harold Macmillan, At the End of the Day 1961-63 (London: MacMillan
London, Ltd., 1973), 6:359-60. According to Macmillan: "The President
did not want to give us Polaris on political grounds, for fear of upsetting
all the European nations. . . . The arrangement finally agreed was that
we should be supplied with the Polaris missile. . . . Our nuclear fleet was
to be 'assigned' to NATO, except in cases 'where Her Majesty's govern¬
ment may decide that superior national interests are at stake.'. . . Three
days' hard negotiating — nearly four days in reality. The Americans
pushed us very hard. . . the discussions were protracted and fiercely
contested. ..."

21. Ibid.

22. Koskoff, Joseph P. Kennedy, p. 439.

3. BRITAIN'S ASSASSINATION BUREAU: PERMINDEX

1. The former Shaw associate was Gordon Novel. Novel, an associate of
Clay Shaw and Carlos Marcello, was himself under investigation by Jim
Garrison for possible involvement in the Kennedy assassination
conspiracy. An expert in electronic devices (including highly
sophisticated surveillance equipment), Novel was employed by the
Marcello-Permindex group in New Orleans and apparently also by the
CIA through its Miami-based Double-Chek commercial front. Novel was
interviewed by the authors on several occasions during spring-summer
1977. In October or November 1977, Novel was arrested in an Atlanta, Ga.
suburb on charges of violation of bail conditions. The conditions were set
by a New Orleans Parish Judge after a 1976 arrest on charges of
conspiring to burn down a commercial building in that city. Novel is
presently in New Orleans Parish jail awaiting trial on the bomb-arson
plot charges.

2. A series of articles appearing in Paesa Sera on March 4. 12, 14, 1967;
see also Les Echos and Le Figaro during spring 1962 for numerous news

ORGANIZED CRIME

353

and editorial references to Permindex's role in the assassination

attempts against President de Gaulle. .

3. Anonymous, The Permindex Papers, 1970, p. 58. This unpublished
manuscript was reviewed by the authors on condition that the title of the
document and the biographical material provided on its author would be
kept confidential. The Permindex Papers is not the actual title of the
manuscript. The author or authors used documents prepared by the
Justice Department and Treasury Department of the United States
government. Additionally, they cited public sources including magazine
articles, newspaper articles, and books. In cases where the original
sources were cross-checked, the original sources will be cited directly.

4. Ibid., pp. 141-49.

5. Louis Wiznitzer, "Will Garrison's Inquiry into Kennedy Assassination
Lead to Montreal?" Le Devoir. March 16, 1967, Montreal; also Canadian
Dimension, September-October, 1967 (reprint).

6. Giuseppe Pantaleone, "An Interview," Panorama, April, 1970.

7. Anon., Permindex Papers, p. 164.

8. From an unpublished interview with an anonymous Rome-based
foreign correspondent conducted in Rome, August 15-16,1978.

9. Wiznitzer, "Will Garrison's Inquiry."

10. Ibid.

11. Ibid.

12. In Italy, for example, the head of the Order of St. John Ambulance
Squad was directly implicated in the assassination of former Italian
President Aldo Moro. Baron Johann von Schwartzenberg was under
intensive investigation by Italian authorities as the suspected master¬
mind of the Moro murder. Schwartzenberg was exempt from any
prosecution, search, or interrogation due to his diplomatic status as an
emissary of the Sovereign Order of St. John, Order of Malta, which is
recognized by many governments, including the Italian government, as a
sovereign state. Schwartzenberg died within a month of Moro's dea'th in
an automobile accident.

13. Anon.. Permindex Papers, p. 231.

14. Ibid., pp. 231-32.

15. Ibid., p. 161.

16. Allan J. Weberman, Coup d'Etat in America (New York: Joseph
Okpaku, 1975) pp. 39-40.

17. Anon., Permindex Papers, p. 73. The name of the courier was
Maurice Gatlin. According to testimony delivered by Jerry Milton Brooks
before the New Orleans Grand Jury investigating the assassination of
Kennedy, Gatlin was a "transporter" for both the CIA and Division Five
of the FBI.

18. Virtually all the book-length material on Sir William Stephenson and
the British Security Coordination-Special Operations Executive is
"official cover story" commissioned by the SOE to provide limited
exposure to aspects of its operations while withholding the most illegal

354

DOPE, INC.

and anti-American activities. Two books that fit this "official cover
story" description, but which provide numerous references to
Stephenson's methods of operation, including his penetration into every
level of the U.S. military command with his SOE agents, are: H. Mont¬
gomery Hyde, Room 3603 (New York: Ballantine Books, 1962) and
William Stevenson, A Man Called Intrepid (New York: Ballantine Books,
1976).

19. Richard Deacon, A History of the British Secret Service (New York:
Taplinger Publishing Company. 1970), p. 296.

20. Anon., Perm index Papers, p. 265.

21. Ibid., p. 196.

22. Rodney Campbell, The Luciano Project (New York: McGraw-Hill
Book Company, 1977); see also Julian Semyonov, "Capriccio Siciliano,"
Ogonyok (Moscow), October-November, 1978.

23. Julian Semyonov, "Capriccio Siciliano," reprinted in English
translation from Ogonyok in Executive Intelligence Review 43 (1978): 38.

24. As reported in the Permindex Papers, pp. 46-51, Permindex included
among its investors: Morris Dalitz, the organized crime czar of Cleve¬
land and Las Vegas and a personal associate of Lansky dating back to
Prohibition; Joseph Bonanno, the New York City and Phoenix mobster
who took control over the New York City-based Lionel Corporation and
used it as a business front for a variety of criminal activities that included
investment in Permindex; Carlos Prio Socarras, the President of Cuba
from 1948-52 who subsequently became the chief of Meyer Lansky's
gambling racket in Havana until the Castro takeover.

25. Messick, Lansky, p. 241.

26. Canadian Who's Who (Toronto: TransCanada Press) Vols. 7, 8, 9, 10;
and (Toronto: Who's Who Canada Publishers) Vols. 11,12,13.

27. The most comprehensive documentation of the bankrupting of BCI is
contained in an unpublished report by Richard Freeman, "The Case of
Investors Overseas Services: Dirty Money International," August 12,
1978; see also Robert Hutchinson, Vesco (New York: Praeger Publishers,
1974).

28. Messick, Lansky, p. 248.

29. Anon., Permindex Papers, p. 105; and Messick, Lansky, p. 248.

30. George Nichols, "Exclusive: The Mossad — Who Is Behind This
Secret, Global Gang of Political Terrorists Who Intimidate Presidents?"
The Spotlight 39 (1978): 13-16.

31. The Economics Department of the University of Vienna, known as the
Vienna School, was founded as a joint project of the British Fabian Soci¬
ety, the Rothschilds, and the Austrian royal Hapsburg family. In 1868, the
British Foreign Office established the Royal Colonial Institute at
the initiative of the Sassoon family, among others. Its principal sources of
funding were the Hongkong and Shanghai Corp. and Barclays Bank. The
head of the institute, Alfred Marshall, was also the chief economist for
Cecil Rhodes. According to the Official History of the Fabian Society,

ORGANIZED CRIME

355

from 1884-92, Marshall, in collaboration with Fabian Executive members
Beatrice and Sidney Webb, founded three institutes of economics. These
three institutions to this day produce the membership for the Order of St.
John's Mont Pelerin Society.

The Vienna School was established in 1884 on the strength of London
School of Economics publications building the credibility of Karl von
Menger, head of the University of Vienna Economics Department and the
personal economic advisor to the Hapsburg court. Menger, an
impoverished nobleman working as a journalist, had been turned into the
personal economic tutor of Hapsburg Crown Prince Rudolph in 1876 by
Baron Albert Rothschild, head of the family's Vienna House. Each of
Menger's disciples was a Rothschild recruit from the Hapsburg nobility:
Eugen Bohm von Bawerk was a member of the House of Lords and three
times Austrian finance minister from 1896-1904; Friedrich von Weiser,
also a Lord, was the Minister of Commerce.

In addition to Tibor Rosenbaum, some of the leading products of the
Vienna School are Friedrich von Hayek, Herbert von Mises, and Nikolai
Bukharin.

32. Who's Who in Great Britain; see also 1977 Annual Report of the Bank
Leumi.

33. The U.S. government has recently gone on record as believing that
David Graiver is indeed still alive. Graiver achieved notoriety when his
American Bank and Trust Company in New York City went bankrupt in
1976, amid charges that Graiver had siphoned off some $50 million from
the bank and then disappeared. A federal indictment was sought and
gotten. When Graiver was reported to have been killed in a plane crash,
those charges were dropped. In June 1978, the U.S. Attorney for the South
District of New York petitioned for the charges to be reinstated. The
petition was granted the same month. See The New York Times and the
Wall Street Journal of June 3-30,1978.

Rosenbaum was a board member of the American Bank and Trust,
which acted as the conduit for various illegal payments — including the $5
million in bribes that Graiver paid to Argentine officials during 1975 to
"persuade" them to purchase Canada's Candu nuclear reactor system
rather than the originally preferred Westinghouse nuclear reactor.
Graiver received these funds from the Canadian government's official
broker in that matter, Israeli broker and foreign intelligence operative
Shaul Eisenberg.

Graiver, Eisenberg, Rosenbaum, American Bank and Trust chairman
Abe Feinberg, were all proteges of Nahum Goldmann, the man who
brought most of them out of Europe through his 1938 deal with Heinrich
Himmler to select out Jews from Nazi Germany and occupied Austria.
Goldmann, the long-time head of the World Jewish Congreess, was
recently replaced by Chicago-based partner of Salomon Brothers, Phillip
Klutznik; he is the man who sold the American Bank Trust to Graiver —
he ran it on behalf of the Israeli government — in 1975.

34. Who's Who in Canada; see also Wiznitzer. "Will Garrison's Inquiry."

356

DOPE, INC.

35. Col. Sir Edwin King and Sir Harry Luke. The Knights of St. John in
the British Realm — Being the Official History of the Most Venerable
Order of the Hospital of St. John of Jerusalem (London: Hills & Lacy,
1924).

36. See New York Times Index citation on "Banque de Credit Inter¬
nationale" and "Tibor Rosenbaum," particularly covering the period of
September through December, 1974, for numerous references to the
exposure of Bank Hapoalim and related institutions' involvement in
money laundering; see also Katherine Burdman, "The British Crown's
Secret Financial Capability: Israeli Banking," Executive Intelligence
Review 44 (IMS).

37. Criton Zoakos, et al., "The Black International Terrorist Assassina¬
tion Plot to Kill Lyndon H. LaRouche, Jr.," Campaigner Special Report
(New York: Campaigner Publications, 1977), p. 29.

38. Anon., Permindex Papers, p. 87.

39. Ladislas Farago, Aftermath: Martin Bormann and the Fourth Reich
(New York: Simon & Schuster, 1974); see also William Stevenson, The
Bormann Brotherhood (New York: Bantam Books, Inc., 1973).

40. Two Rome interviews conducted from August 10-16,1978, with promi¬
nent Italian journalists and one Austrian journalist who request to
remain anonymous. The interviews were conducted by members of the
Rome staff of the New Solidarity Press Service at the request of the
authors.

41. Max Gallo, Mussolini's Italy: Twenty Years of the Fascist Era (New
York: Macmillan Company, 1973).

42. Anon., Permindex Papers, p. 97.

43. Ibid., p. 178.

44. Ibid., p. 213.

45. Ibid., p. 212.

46. Edward J. Epstein, Agency of Fear — Opiates and Political Power in
America (New York: G.P. Putnam's Sons, 1977).

4. PERMINDEX UNVEILED: RESORTS INTERNATIONAL

1. Hutchinson, Vesco.

2. Messick, Lansky, pp. 221-51. Lansky had had his eye on the Bahamas
since the 1940s, but his attention was then fixed on his Cuban and Las
Vegas casino empires. (Castro's refusal to play ball with the Hofjuden
mob allegedly inspired Lansky to issue a $1 million "contract" on
Castro's life.) With the 1959 fall of the Batista government the Bahama
option became an imperative. Thus, it was no accident that the British
gave the go-ahead for legalized gambling not only for their Caribbean
holdings but in Britain as well. Messick reports (p. 228): "All that was
needed in 1960 was to find a semirespectable front from which he (Lansky
— ed.) could operate."

3. Ibid., p.228.

ORGANIZED CRIME

357

4. Ibid., p.229.

5. Ibid., pp. 230-32; see also Jim Hougan, "A Surfeit of Spies," Harpers,
December 1974, p. 58; Frank J. Prial, "Concern Fights Crime in Busi¬
ness," New York Times, July 26,1970, Business Section, p. 1, p. 11.

6. Messick, Lansky, pp. 230-231, 235.

7. Ibid., pp. 232-233.

8. Ibid., p. 232; see also Hougan, "Surfeit of Spies," pp. 58,63.

9. Hougan, "Surfeit of Spies," pp. 58,63.

10. Hutchinson, Vesco; see also James Hougan, Spooks: The Haunting of
America — The Private Use of Secret Agents (New York: William
Morrow and Co., 1978), pp. 390-392.

11. Hougan, "Surfeit of Spies," p. 54.

12. Ibid., pp. 66-67; see also Hutchinson, Vesco.

13. Hougan, "Surfeit of Spies,"pp. 54, 56: see also Prial, "Concern Fights
Crime," p. 11.

14. Hougan, "Surfeit of Spies," p. 66: Hougan's information is corrob¬
orated by the authors' interviews with law enforcement officials.

5. THE JACOBS FAMILYS EMPRISE: SPORTS AND CRIME

1. Testimony of labor racketeer, James Piumeri (Jimmy Doyle) before

the McClellan Subcommittee on Criminal Laws and Procedures; see also
Congressman Sam Steiger's insertion into the Congressional Record of
the 91st Congress, "Emprise: A Lesson in Coiporate Calumny."

2. Testimony of Piumeri before the McClellan Subcommittee on Criminal
Laws and Procedures.

3. From their positions in Cleveland and Buffalo, the Jacobs family was a
Bronfman link into the United States in alliance with the Reinfeld Syndi¬
cate and the Big Seven Combine (see Section 1).

4. "Emprise: A Lesson in Corporate Calumny," 91st Congressional

Record, p. 5888; "Emprise: A Little More of the Iceberg Exposed," 91st
Congressional Record, p. 6830.

5. Many of the Justice Department officials who worked with Robert

Kennedy in the "Get Hoffa" campaign turned up playing supporting roles
in forcing Richard Nixon out of office, particularly when Nixon demon¬
strated a commitment to go after organized crime. This includes most

especially Horace S. Webb.

6. Jeremy Jacobs admitted to the activities directed against Steiger
under questioning during 1972 hearings of the House Select Committee on
Crime.

7. U.S. Labor Party Legal Division, "Evidence to Overturn the Fraud¬
ulent Election of James Earl Carter," Campaigner Special Report (New
York: Campaigner Publications, November 26, 1976); U.S. Labor Party
Legal Division, "Conclusive Evidence of Carter Vote Theft Goes Before
Federal Court in Ohio and New York," Campaigner Special Report (New

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York: Campaigner Publications, December 9, 1976). The Committee for
Fair Elections, a nonpartisan citizens group representing participation
from the U.S. Labor Party, the Democratic, Republican, and American
Independent parties, initiated official investigations and selective court
actions in Pennsylvania, Wisconsin, New York, and Ohio as the result of
accumulated evidence of overwhelming fraud in the general elections of
November, 1976. In addition to extensive regional press coverage of the
specific legal actions, the investigations and legal actions received

national coverage on CBS television news (The Seven O'clock Report) by
Walter Cronkite and in the Washington Star by Jack Germond.

During those same 1976 general elections, the following additional
situations suggested similar evidence of election tampering on a large
scale:

* Rep. Richard Torny was convicted of vote fraud in the Louisiana
Democratic primary following a federal grand jury investigation. Torny
was removed from the congressional seat that he won in the subsequent
November general election.

* Ron Paul, a former U.S. congressman, contested the general elec¬

tions in Austin, Texas, in which he was narrowly defeated by Democratic
Party candidate Robert Gamage. Paul proved sizable fraud before the
courts: however, the judge ruled that sufficient magnitude of fraud to
turn the elections had not been shown and denied Paul's motion to be
placed in Congress.

* Two witnesses to massive fraud by Congressman William Clay (D-

Mo.) in the November elections in St. Louis subsequently died under
violent and mysterious circumstances. Clay is linked to the Jacobs family
interests (see below in text).

8. "Critic Changes Tune," Courier Express (Buffalo, N.Y.), January 27,
1977.

9. According to a July 1978 edition of the Toronto Globe-Mail, Mark

Phillips stayed at the residence of Koffler when he went to Canada.

10. Courier Express, December 28,1970.-

11. According to the June 15, 1972, Buffalo Evening News, Max Jacobs
was a heavy contributor to Scoop Jackson.

12. ' The information presented here on the HongShang takeover attempt
is on the public record and was reported in the Courier Express.

13. Courier Express. February 24,1976.

14. The top Israeli purveyor of weapons to the Central American dictator¬
ships is one Shaul Eisenberg, who operates behind a myriad of trading
company fronts, of which the best known is "United Development, Inc."
with headquarters in Panama. Eisenberg is the world's largest supplier
of assassination weapons, as well as the "godfather" of the Israel Air¬
craft Company, the manufacturer of Israel's Kfir fighter plane.
According to the Washington Post of September 11, 1978, he is also one of
the most senior operatives of the Israeli secret intelligence, the Mossad.
With specializations in the Far East and Latin America, Eisenberg runs

ORGANIZED CRIME

359

the Zurich Mossad station, under the day-to-day control of the Zurich
branch of Bank Leurni and hte personal direction of a Swiss-based
member of the Oppenheimer family. Apart from the arming of such
entities as the Somoza dictatorship of Nicaragua, the capabilities of the
Eisenberg operation include Israel's main illicit connections to the Far
East, where Eisenberg spent World War II, and a significant portion of
wholesale drug transshipments across the Mediterranean route. Eisen¬

berg build (and paid for in cash) a building dubbed "Adia House" in Tel
Aviv, housing most of the Asian countries' trade representatives in

Israel. He also has a billion-dollar credit line in Hong Kong at the

Standard Chartered Bank.

15. Zoakos, Assassination Plot, pp. 9-11. The information was originally

developed in a July 15, 1978 telephone interview with Paul Bowden, the
head of the Detroit Anti-Nazi Coalition and himself a retired UAW

worker.

16. leffrey Steinberg, "Jacobs Family and Related Organized Crime
Activities in the St. Louis, Mo. Area," an unpublished manuscript (New
York), October 1978.

6. THE PHILADELPHIA STORY

1. Phone interview with official of Paco Pharmaceuticals. For Ernst
Japhet control over Paco, see Charterhouse Japhet Annual Report, 1977.

2. Proceedings and Yearbook, Philadelphia Yearly Meeting of the

Religious Society of Friends, 1978, cites "friendly presence group"
activities to conduct nonviolent demonstrations in support of human
rights for MOVE (p. 11-12) and operations request of $2000 per month for

work in conjunction with vigil at MOVE headquarters (p. 16). According

to the Philadelphia Inquirer, a diary was found at MOVE headquarters
after the September 1978 shootout citing support, including financial
support, from the American Friends Service Committee.

3. William Penn Foundation Annual Report for 1977 cites $120,000 to

Neighborhood Resources West (p. 39). The wife of the director for the
Movement for a New Society is on the board of directors of the NRW.
NRW funds Movement houses in West Philadelphia for "community
development," according to interviews with "members of both the NRS
and the Movement for a New Society. The Annual Report of the

Philadelphia Foundation for the year ending April 1977 and also for 1976
cites over $20,000 transferred to a "clearinghouse" which in turn funds
community projects (p. 14); see also Proceedings and Yearbook,

Philadelphia Yearly Meeting, pp. 183-84.

PART IV

Creating the Market:
The British Origins
of the Counterculture

The acts or gestures that accompany the incantations con¬
stitute the rite (of Isis). In these dances, the beating of

drums and the rhythm of music and repetitive movements
were helped by hallucinatory substances like hashish or
mescal; these were consumed as adjuvants to create the

trance and the hallucinations that were taken to be the visi¬
tation of the god. The drugs were sacred, and their know¬
ledge was limited to the initiated; their preparation and

their gathering were surrounded with . . . secrecy. . , . In

some cases, like the harvesting of the mandrake, they

remained secret until the Middle Ages.

Possibly because they gave the illusion of satisfied de¬
sires, and allowed the innermost feelings to escape, these

rites acquired during their execution a frenzied character
that is conspicuous in certain spells: "Retreat! Re is pierc¬

ing thy head, slashing thy face, dividing they head, crush¬
ing it in his hands; thy bones are shattered, thy limbs are
cut to pieces."

The House of Life: Magic and
Medical Science in Ancient Egypt,
by Paul Ghalioungui (1)

363

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DOPE, INC.

If this description of pagan cult ceremonies dating back to the
Egyptian Isis priesthood of the third millenium B.C. reads like a
journalistic account of a "hippy be-in" circa 1969 A.D., it should.
The counterculture that was foisted on the 1960s adolescent
population is not merely analogous to the ancient Cult of Isis. It is
a literal resurrection of the Isis cult — down to the popularization
of the Isis cross as the counterculture's most frequently used
symbol.

As we shall show here, the drug-rock counterculture was the
result of Britain's 30-year Opium War against the United States,
which included not only chemical and psychological warfare but
the hideous military project called the Vietnam War.

The British fostered the creation of the bestial rock and drug
cult for the same reason that their colonial policy enforced
backwardness throughout the empire and for the same reason
that the pharaohs of ancient Egypt and the Ptolemaic priests of
the first century A.D. Egypt fostered the practice. As long as a
population is organized around superstition, magic, hal¬
lucinogenic drugs, and animal-like pursuit of immediate sensory
gratification ("if it feels good, do it"), it will remain incapable of
acting on behalf of its own interests. It was for this reason that
the oligarchies of ancient Egypt organized themselves into
priesthoods and created dozens of apparently contending pagan
cults, all characterized by the same bestialist outlook.

True religion, as opposed to the worship of magically endowed
cult-gods, addresses man's capacity for reason, his "Godliness."
Unlike the lower beasts, the human species is uniquely capable of
creative thought — the ability to break out of the bounds of sense-
certainty, develop new scientific knowledge, and socially apply
that knowledge through technological innovations that uplift the
material and cultural condition of man. Historically such true
religion has been associated with the development of urban
centers where science, culture, and commerce could flourish. Its
sworn enemy has been the oligarchy and its priesthoods and cults
which on countless occasions have mobilized to sack the cities,
murder the city-builders, and bring on the "dark ages" of plague
and ignorance.

BRITISH ORIGINS OF COUNTERCULTURE

365

The gentlemen at the Royal Institute of International Affairs
responsible for charting Britain's global drug trafficking
recognized that no mass-scale drug epidemic could be produced
in the United States until the American people's fundamental
commitment to scientific and technological progress had first
been significantly undermined. The drug-rock counterculture
was no mere "sociological phenomenon."

In his City of God, the great humanist St. Augustine described
the degeneration into cultism that brought on the destruction of
Rome, in terms that have direct bearing on the post-1963 degen¬
eration of the United States:

The stage plays, those exhibitions of depravity and un¬
bounded license, were not introduced in Rome by men's
vices, but by the command of your gods. Far more
justifiably might you have paid divine honors to your Scipio
than worship gods such as those, for they were not more
virtuous than their high priest.

Are your minds bereft of reason? You are not merely
mistaken; this is madness. Here are people in the east be¬
wailing Rome's humiliation, and great states in remote
regions of the earth holding public mourning and lamenta¬
tion — and you Romans are searching for theaters, pouring
into them, filling them, behaving more irresponsibly than
ever before. It is this spiritual disease, degeneration,
decline into immorality and indecency that Scipio feared
when he opposed the erection of theaters. He saw how
easily ease and plenty would soften and ruin you. He did not
wish you to be free from fear.

He did not think that the republic could be happy while
walls were standing, yet morals were collapsing. But, you
were more attached to the seductions of foul spirits than to
the wisdom of men with foresight. That is why you take no
blame for the evil you do, but blame Christianity for the
evil you suffer. Depraved by prosperity, and unchastened
by adversity, you desire, in your security, not the peace of
the State, but liberty for license. (2)

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The high priesthood

The "case officer" for Britain's Opium War was Aldous
Huxley, the grandson of Thomas H. Huxley, a founder of the
Rhodes Round Table group and a lifelong collaborator of Arnold
Toynbee. Toynbee himself sat on the RIIA council for nearly 50
years, headed the Research Division of British intelligence
throughout World War II, and served as wartime briefing officer
to Prime Minister Winston Churchill.

Toynbee's "theory" of history, expounded in his 20-volume
history of Western civilization, was that its determining feature
has always been the rise and decline of grand imperial dynasties.
At the very point that these dynasties — the "thousand year
Reich" of the Egyptian pharaohs, the Roman Empire, and the
British Empire — succeed in imposing their rule over the entire
face of the earth, they tend to decline. Toynbee argued that this
decline could be abated if the ruling oligarchy (like that of the
British Round Table) would devote itself to the recruitment and
training of an ever-expanding priesthood devoted to the
principles of imperial rule. (3)

Trained at Toynbee's Oxford, Aldous Huxley was one of the
initiates in the "Children of the Sun," a dionysian cult comprised
of the children of Britain's Round Table elite. (4) Among
the other initiates were T.S. Eliot, W. H. Auden, Sir Oswald
Moseley, and D. H. Lawrence, Huxley's homosexual lover. It was
Huxley, furthermore, who would launch the legal battle in the
1950s to have Lawrence's pornographic novel Lady Chatterley's
Lover allowed into the United States on the ground that it was a
misunderstood "work of art." (5)

Aldous Huxley, along with his brother Julian, was tutored at
Oxford by H. G. Wells, the head of British foreign intelligence
during World War I. Wells's writings (Time Machine, etc.), along
with those of his proteges Aldous Huxley (Brave New World) and
George Orwell (1984, Animal Farm), were written as "mass
appeal" organizing documents on behalf of Britain's "en¬
lightened" world order. Only in the United States are these
"science fiction classics" taught in grade school as attacks

against fascism. (A contemporary British intelligence operative-
turned-author, Anthony Burgess, wrote Clockwork Orange in the
Wells-Orwell-Huxley tradition as a pornographic celebration of
the drug-rock counterculture.)

Under Wells's tutelage Huxley was first introduced to Aleister
Crowley (see Part II, Section 9). Crowley was a product of the
cultist circle that developed in Britain from the 1860s under the
guiding influence of Edward Bulwer-Lytton — who, it will be
recalled, was the colonial minister under Lord Palmerston
dining the Second Opium War. In 1886, Crowley, William Butler
Yeats, and several other Bulwer-Lytton proteges formed the Isis-
Urania Temple of Hermetic Students of the Golden Dawn. This
Isis Cult was organized around the 1877 manuscript Isis Unveiled
by Madame Helena Blavatsky, in which the Russian occultist
called for the British aristocracy to organize itself into an Isis
Priesthood. (6)

Crowley in turn initiated Aldous Huxley into the Isis-Golden
Dawn Temple and introduced him to psychedelic drugs in
1929. (7)

In 1937, Huxley moved to the United States, where he remained
throughout the period of World War II. Through a Los Angeles
contact, Jacob Zeitlin, Huxley and pederast Christopher Isher-
wood were employed as script writers for MGM, Warner
Brothers, and Walt Disney studios. As we have seen, Hollywood
was already dominated by organized crime elements bankrolled
and controlled through London. Joseph Kennedy was the front
man for a British consortium that created RKO studios, and
"Bugs" Siegel, the West Coast boss of the Lansky syndicate, was
heavily involved in Warner Brothers and MGM.
Huxley was instrumental in founding a nest of Isis cults in
southern California and in a San Lrancisco suburb called Ojai —
which consisted exclusively of several hundred deranged wor¬
shippers of Isis and other cult gods. (8) Isherwood, during the
California period, translated and propagated a number of ancient
Zen Buddhist documents, inspiring Zen-mystical cults along the
way. (9)

In effect, Huxley and Isherwood (joined soon afterwards by
Thomas Mann and his daughter Elisabeth Mann Borghese) laid

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the foundation during the late 1930s and the 1940s for the later
LSD culture by recruiting a core of "initiates" into the Tsis cults
that Huxley's mentors Bulwer-Lytton. Blavatsky, and Crowley,
had constituted while stationed in India.

LSD: "visitation from the gods"

The next phase in the war involved the introduction of LSD for
which Aldous Huxley was the designated Crown agent.

Lycergic acid diethylamide, or LSD, was developed in 1943 by
Albert Hoffman, a chemist at Sandoz A.G. — a Swiss phar¬

maceutical house owned by S. G. Warburg. While precise
documentation is unavailable as to the auspices under which the
LSD research was commissioned, it can be safely assumed that
British intelligence and its subsidiary U.S. Office of Strategic

Services were directly involved. Allen Dulles, the director of the
U.S. Central Intelligence Agency in 1952 when that agency began
its covert LSD experiment, MK-ULTRA, was the OSS station

chief in Berne, Switzerland throughout the early Sandoz
research. One of his OSS assistants was James Warburg, of the
same Warburg family, who was instrumental in the 1963 founding
of the Institute for Policy Studies, and worked with both Huxley
and Robert Hutchins. (10)

In 1952, Aldous Huxley returned to the United States from

Britain, accompanied by Dr. Humphrey Osmond, the Huxleys'
private physician. Osmond had been part of a discussion group
Huxley had organized at the National Hospital, Queens Square,
London. Along with another seminar participant, J. R. Smythies,
Osmond wrote Schizophrenia: A New Approach, in which he
asserted that mescaline — a derivative of peyote mushrooms
used in ancient Egyptian and Indian pagan rites — produced a
psychotic state identical in all clinical respects to schizophrenia.
On this basis, Osmond and Smythies advocated experimentation
with hallucinogenic drugs as a means of developing a "cure" for
mental disorders.

Osmond was brought in by Allen Dulles to play a prominent
role in MK-ULTRA. At the same time, Osmond, Huxley, and the

BRITISH ORIGINS OF COUNTERCULTURE

369

University of Chicago's Robert Hutchins held a series of secret
planning sessions in 1952-53 for a second, private LSD-mescaline
project under the Ford Foundation funding. (11) Hutchins, it will
be recalled, was the program director of the Ford Foundation
during this period. His LSD proposal incited such rage in Henry
Ford II that Hutchins was fired from the foundation the following
year.

It was also in 1953 that Osmond gave Huxley a supply of
mescaline for his personal consumption. The next year, Huxley
wrote The Doors of Perception, the first public manifesto of the
psychedelic drug cult, which claimed that hallucinogenic drugs
"expand consciousness."

Although, through the sane intervention of Henry Ford, the
Ford Foundation rejected the Hutchins-Huxley proposal for
private foundation sponsorship of LSD, it appears that the
project was not dropped. Beginning in 1962, the RAND Cor¬
poration of Santa Monica California began a four-year experi¬
ment in LSD, peyote, and marijuana. The RAND Corporation
was established simultaneously with the reorganization of the
Ford Foundation during 1949-50. RAND was an outgrowth of the
wartime Strategic Bombing Survey, a "cost analysis" study of
the psychological effects of random bombings of German
population centers. It is well known that RAND has been respon¬
sible for conduiting such patently insane policies as "limited ther¬
monuclear war" and the "insanity doctrine" into the U.S.
Pentagon — most notably through RAND's James Schlesinger.

According to the 1962 RAND Abstract, W. H. McGlothlin
conducted a preparatory study on "The Longlasting Effects of

LSD on Certain Attitudes in Normals: An Experimental
Proposal." The following year, McGlothlin conducteda year-long

experiment on 30 human guinea pigs, called "Short-Term Effects
of LSD on Anxiety, Attitudes and Performance." The study
incredibly concluded that LSD improved emotional attitudes and

resolved anxiety problems. (12)

HUXLEY AT WORK

Huxley expanded his own LSD-mescaline project in California
by recruiting several individuals who had been initially drawn

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into the cult circles he helped establish during his 1937-45 stay.
The two most prominent individuals were Alan Watts and Dr.
Gregory Bateson (the former husband of Dame Margaret Mead).
Mead).

Watts became a self-styled "guru" of a nationwide Zen
Buddhist cult built around a series of his well-publicized books.
Bateson, an anthropologist with the OSS, became the director of a
hallucinogenic drug experimental clinic at the Palo Alto
Veterans Administration Hospital. Under Bateson's auspices, the
initiating "cadre" of the LSD cult — the hippies — were
programmed. (13)

Watts at the same time founded the Pacifica Foundation, which
sponsored two radio stations — WKBW in San Francisco and
WBAI-FM in New York City. The Pacifica stations were among
the first to push the "Liverpool Sound" — the British-imported
hard rock twanging of the Rolling Stones, the Beatles, and the
Animals. They would later pioneer "acid rock" and eventually
the avowedly fascist-psychotic "punk rock."

During the fall of 1960, Huxley was appointed Visiting
Professor at the Massachusetts Institute of Technology in
Boston. Around his stay in that city, Huxley created a circle at
Harvard parallel to his West Coast LSD team. The Harvard
group included Huxley, Osmond, and Watts (brought in from
California), Timothy Leary, and Richard Alpert.

The ostensible topic of the Harvard seminar was "Religion and
its Significance in the Modern Age." The seminar was actually a
planning session for the "acid rock" counterculture. Huxley
established contact during this Harvard period with the president
of Sandoz, which at the time was working on a CIA contract to
produce large quantities of LSD and psilocybin (another synthet¬
ic hallucinogenic drug) for MK-ULTRA, the CIA's official
chemical warfare experiment. According to recently released
CIA documents, Allen Dulles, purchased over 100 million doses of
LSD — almost all of which flooded the streets of the U.S. during
the late 1960s. During the same period Leary began privately pur¬
chasing large quantities of LSD from Sandoz as well. (14)

From the discussions of the Harvard seminar, Leary put

BRITISH ORIGINS OF COUNTERCULTURE

371

together the book The Psychedelic Experience, based on the
ancient cultist Tibetan Book of the Dead. It was this book that
popularized Osmond's previously coined term, "psychedelic
mind expanding."

THE ROOTS OF THE FLOWER PEOPLE

Back in California, Gregory Bateson had maintained the
Huxley operation out of the Palo Alto VA hospital. Through LSD
experimentation on patients already hospitalized for
psychological problems, Bateson established a core of
"initiates" into the "psychedelic" Isis Cult.

Foremost among his Palo Alto recruits was Ken Kesey. In
1959, Bateson administered the first dose of LSD to Kesey. By 1962,
Kesey had completed a novel, One Flew Over the Cuckoo's
Nest, which popularized the notion that society is a prison and the
only truly "free" people are the insane. (15)

Kesey subsequently organized a circle of LSD initiates called
"The Merry Pranksters." They toured the country disseminating
LSD (often without forewarning the receiving parties), building
up local distribution connections, and establishing the pretext for
a high volume of publicity on behalf of the still miniscule
"counterculture."

By 1967, the Kesey cult had disseminated such quantities of
LSD that a sizable drug population had emerged, centered
in the Haight-Ashbury district of San Francisco. Here Huxley
collaborator Bateson set up a "free clinic."

Among the founders of the "free clinic" were:

Dr. David Smith — now a "medical advisor" for the National
Organization for the Reform of Marijuana Laws (NORML), an
entity we shall discuss in Part V;

Dr. Ernest Dernberg — an active-duty military officer, prob¬
ably on assignment through MK-ULTRA;

Roger Smith — a street gang organizer trained by Saul

Alinsky. During the Free Clinic period, Roger Smith was the
parole officer (and probable controller) of the cultist mass

murderer Charles Manson;

Dr. Peter Bourne — formerly President Carter's special

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assistant on drug abuse. Bourne did his psychiatric residency at
the clinic. He had previously conducted a profiling study of GI
heroin addicts in Vietnam.

The Free Clinic paralleled a project at the Tavistock Institute,
the psychological warfare agency for British Secret Intelligence
Service. Tavistock, founded as a clinic in London in the 1920s, had
become the Psychiatric Division of the British Army during
World War II under its director. Dr. lohn Rawlings Rees. (16)

During the 1960s, the Tavistock Clinic fostered the notion that
no criteria for sanity exist and that psychedelic "mind¬
expanding" drugs are valuable tools of psychoanalysis. In 1967,
Tavistock sponsored a Conference on the Dialectics of
Liberation, chaired by Tavistock psychoanalyst Dr. R. D. Laing,
himself a popularized author and advocate of drug use. That
conference drew a number of people who would soon play a
prominent role in fostering terrorism; Angela Davis and Stokely
Carmichael were two prominent American delegates. (17)

Thus, by 1963, Huxley had recruited his core of "initiates." As
the general reader is well aware, all of them — Leary, Osmond.
Watts, Kesey, Alpert — were highly publicized promoters of the
early LSD counterculture. By 1967, with the cult of "Flower
People" in Haight-Ashbury and the emergence of the antiwar
movement, the United States was ready for the inundation of
LSD, hashish, and marijuana that hit American college
campuses in the late 1960s.

"The beating of drums ..."

In 1963, the Beatles arrived in the United States, and with their
decisive airing on the Ed Sullivan Show, the "British sound" took
off in the USA. For their achievement, the four rocksters were
awarded the Order of the British Empire by Her Majesty the
Queen. The Beatles and the Animals, Rolling Stones, and homi¬
cidal punk rock maniacs who followed were, of course, no more a
spontaneous outpouring of alienated youth than was the acid
culture they accompanied.

BRITISH ORIGINS OF COUNTERCULTURE

373

The social theory of rock was elaborated by British agent and
musicologist Theodor Adorno, who came to the United States in
1939 to head the Princeton University Radio Research Project
(18) Adorno writes:

In an imaginary but psychologically emotion-laden
domain, the listener who remembers a hit song will turn
into the song's ideal subject, into the person for whom the
song ideally speaks. At the same time, as one of many who
identify with that fictitious subject, that musical I, he will
feel his isolation ease as he himself feels integrated into the
community of "fans." In whistling such a song he bows to a
ritual of socialization, although beyond this unarticulated
subjective stirring of the moment his isolation continues
unchanged ....

The comparison with addiction is inescapable. Addicted
conduct generally has a social component: it is one
possible reaction to the atomization which, as sociologists
have noticed, parallels the compression of the social
network. Addiction to music on the part of a number of
entertainment listeners would be a similar phenomenon
(emphasis added). (T9)

The Hit Parade is organized precisely on the same principles
used by Egypt's Isis priesthood and for the same purpose: the
recruitment of youth to the dionysiac counterculture.

In a repoit prepared for the University of Michigan's Institute
of Social Research, Paul Hirsch described the product of
Adorno's Radio Research Project. (20) According to Hirsch, the
establishment of postwar radio's Hit Parade "transformed the
mass medium into an agency of sub-cultural programming."
Radio networks were converted into round-the-clock recycling
machines that repeated the top 40 "hits." Hirsch documents how
all popular culture — movies, music, books, and fashion — is now
run on the same program of preselection. Today's mass culture
operates like the opium trade: the supply determines the
demand.

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DOPE, INC.

The Vietnam war and
the antiwar trap

But without the Vietnam War and the British Secret Intel¬
ligence Services' "antiwar" movement, the Isis Cult would have
been contained to a fringe phenomenon — no bigger than the
beatnik cult of the 1950s that was an outgrowth of the early Huxley
ventures in California. The Vietnam war created the climate of
moral despair that opened the educated elite of America's youth
— the first 20th-century generation raised in a climate free from
depression and war — to drugs.

The reader has already been shown that the Kennedy Ad¬
ministration installed in the White House by the 1960 elections
was sponsored by the British Round Table (see Part III). Under
Kennedy, American involvement in Vietnam — which had been
vetoed by the Eisenhower Administration — was initiated on a
limited scale. Under Lyndon Johnson, American military
presence in Vietnam began in earnest. Johnson's principal
Vietnam advisor was not even American. He was a British
officer. Sir Robert Thompson, whose entire career had been
spent conducting counterinsurgency warfare in Southeast Asia.
Playing on the President's "yahoo" anticommunist profile,
Thompson convinced President Johnson that communist in¬
surgency had to be stopped at all costs and that a strong U.S.
military presence in South Vietnam was necessary for that con¬
tainment. Johnson, a military and foreign policy incompetent
whose other chief Vietnam advisor. National Security Council
Director Walt Rostow, held the Cross of the Order of the British
Empire, was dragged by the nose into Vietnam by the British.

The British, to put it simply, had two reasons for manipulating
the United States into Vietnam. The first was to foster a "limited
war" confrontation in Southeast Asia between the United States
and the Soviet Union (through its North Vietnamese
"surrogate") that would both refuel the Cold War and effectively
undercut the influence of both powers in the region. The second
and equally significant reason was to demoralize the American
people to such a degree that the sense of national pride and

BRITISH ORIGINS OF COUNTERCULTURE

375

confidence in the future progress of the republic would be forever
shattered.

Just as Aldous Huxley began the counterculture subversion of
the United States 30 years before its consequences became
evident to the public. Lord Bertrand Russell began laying the
foundations for the antiwar movement of the 1960s before the
1930s expired. Lord Russell and Aldous Huxley cofounded the

Peace Pledge Union in 1937 — just before both went to the United
States for the duration of World War II. (21)

Russell's antiwar zeal, it should be noted, was a patent fraud.
During World War II, Lord Russell opposed British and
American warfare against the Nazis because he was a peripheral

member of the pro-Nazi Cliveden Set. In 1947, when the United

States was in possession of the atomic bomb and Russia was

not, Russell loudly advocated that the United States pre¬
emptively commence World War III — against the Soviet Union.
His 1950s "Ban the Bomb" aboutface was fundamentally an

antitechnology movement against the peace-through-devel-
opment potentials represented by President Eisenhower's
"Atoms for Peace" initiative to the Soviets; Eisenhower's 1954
proposal to the United Nations was predicated on the develop¬
ment of thermonuclear fusion power and concomitant city-build¬

ing projects throughout the underdeveloped sector.

From the mid-1950s on, Russell’s principal assignment was to
build an international antiwar and anti-American movement.
Coincident with the escalation of U.S. involvement in Vietnam
under British manipulation, Russell upgraded the old Peace
Pledge Union (which had been used in West Germany throughout
the postwar period to promote an anticapitalist "new left" wing
of the Social Democratic Party, recruiting several future

members of the Baader-Meinhof terrorist gang in the process)
into the Bertrand Russell Peace Foundation.

In the United States, New York's Our Crowd banks provided

several hundred thousand dollars to establish the Institute for
Policy Studies (IPS), as effectively the U.S. branch of the Russell
Peace Foundation. Among the founding trustees of the IPS was
James Warburg, directly representing the family's interests.

IPS drew its most active operatives from a variety of British-

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DOPE, INC.

dominated institutions. IPS founding director Marcus Raskin
was a member of the Kennedy Administration's National Secur¬
ity Council and also a fellow of the National Training Labs, a U.S.
subsidiary of the Tavistock Institute founded by Dr. Kurt Lewin.

IPS in turn financed and ran the Students for a Democratic
Society (SDS) — the student antiwar movement — up through
and beyond its splintering into a number of terrorist and Maoist
gangs in the late 1960s. (22) If one were to take the time to trace
the pedigrees of all of the leaders of the antiwar movement in the
United States, an almost unbroken pattern of either IPS or direct
Russell Foundation control would emerge. This is not to say that
the majority of antiwar protesters were paid, certified British
agents. On the contrary, the overwhelming majority of antiwar
protesters went into SDS on the basis of outrage at the
developments in Vietnam and subsequently got trapped. Once
caught in the environment defined by Russell and the Tavistock
Institute's wartime psychological warfare experts, their sense of
values and their creative potential were snatched up in a cloud of
hashish smoke.

The LSD connection

Who provided the drugs that swamped the antiwar movement
and the college campuses of the United States in the late 1960s?
The organized crime infrastructure — which had set up the
Peking Connection for the opium trade in 1928 — provided the
same services in the 1960s and 1970s it had provided during Pro¬
hibition. This was also the same network Huxley had established
contact with in Hollywood during the 1930s.

The LSD Connection begins with one William "Billy" Mellon
Hitchcock. Hitchcock was a graduate of the University of Vienna
and a scion of the millionaire Mellon banking family of
Pittsburgh. (Andrew Mellon of the same family had been
the Treasury Secretary throughout Prohibition.) In 1963, when
Timothy Leary was thrown out of Harvard, Hitchcock rented a
55-room mansion in Millbrook, New York where the entire Leary-
Huxley circle of inititates was housed until its later move back to
California. (23)

BRITISH ORIGINS OF COUNTERCULTURE

377

Hitchcock was also a broker for the Lansky syndicate and for
the Fiduciary Trust Co., Nassau, Grand Bahamas — a wholly
owned subsidiary of Investors Overseas Services. He was
formally employed by Delafield and Delafield Investments
where he worked on buying and selling vast quantities of stock in
the Mary Carter Paint Co. — soon to become Resorts
International.

In 1967, Dr. Richard Alpert put Hitchcock in contact with
Augustus Owsley Stanley III. As Owsley's agent, Hitchcock
retained the law firm of Rabinowitz, Boudin and Standard (24) to
conduct a feasibility study of several Caribbean countries to
determine the best location for the production and distribution of
LSD and hashish.

During this period, Hitchcock joined Leary and his circle in
California. Leary had established an LSD cult called the Brother¬
hood of Eternal Love and several front companies, including
Mystics Art World, Inc. of Laguna Beach, California. These
California-based entities ran lucrative trafficking in Mexican
marijuana and LSD brought in from Switzerland and Britain.
The British connection had been established directly by
Hitchcock, who contracted the Charles Bruce chemical firm to
import large quantities of the chemical components of LSD. With
financing from both Hitchcock and George Grant Hoag, the heir
to the J.C. Penney dry goods fortune, the Brotherhood of Eternal
Love set up LSD and hashish production-marketing operations in
Costa Rica in 1968. (25)

Toward the end of 1968, Hitchcock expanded the LSD-hashish
production operations in the Caribbean with funds provided by
the Fiduciary Trust Co. (IOS). In conjunction with J. Vontobel
and Co. of Zurich, Hitchcock founded a corporation called 4-Star
Anstalt in Liechtenstein. This company, employing "investment
funds" (i.e., drug receipts) from Fiduciary Trust, bought up
large tracts of land in the Grand Bahamas as well as large
quantities of ergotamine tartrate, the basic chemical used in the
production of LSD. (26)

Hitchcock's personal hand in the LSD connection abruptly
ended several years later. Hitchcock had been working closely
with Johann F. Parravacini of the Parrav acini Bank Ltd. in
Berne, Switzerland. From 1968, they had together funded even

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DOPE, INC.

further expansion of the Caribbean-California LSD-hashish
ventures. In the early 1970s, as the result of a Securities and
Exchange Commission investigation, both Hitchcock and Parra-
vacini were indicted and convicted of a $40 million stock fraud.
Parravacini had registered a $40 million sale to Hitchcock for
which Hitchcock had not put down a penny of cash or collateral.
This was one of the rare instances in which federal investigators
succeeded in getting inside the $200 billion drug fund as it was
making its way around the "offshore" banking system.

Another channel for laundering dirty drug money — a channel
yet to be compromised by federal investigative agencies — is
important to note here. This is the use of tax-exempt foundations
to finance terrorism and environmentalism. One immediately

relevant case makes the point.

In 1957, the University of Chicago's Robert M. Hutchins

established the Center for the Study of Democratic Institutions
(CSDI) in Santa Barbara, California. Knight Commander

Hutchins drew in Aldous Huxley, Elisabeth Mann Borghese, and
some Rhodes Scholars who had originally been brought into the

University of Chicago during the 1930s and 1940s.

The CSDI was originally funded (1957-61) through a several-
million-dollar fund that Hutchins managed to set up before his
untimely departure from the Ford Foundation. From 1961 on, the
Center was principally financed by organized crime. The two
funding conduits were the Fund of Funds, a tax-exempt front for
Bernie Cornfeld's IOS, and the Parvin Foundation, a parallel
front for the Parvin-Dohrman Co. of Nevada. IOS and Parvin-
Dohrman held controlling interests in the Desert Inn, the Aladdin,
and the Dunes — all Fas Vegas casinos associated with the
Fansky syndicate. IOS, as already documented, was a conduiting
vehicle for FSD, hashish, and marijuana distribution throughout
the 1960s. (27) In 1967 alone, IOS channeled between $3-4 million
to the center. Wherever there is dope, there is Dope, Inc.

THE DRUG LOBBY

379

Notes

IV. CREATING THE MARKET: THE BRITISH ORIGINS OF THE
COUNTERCULTURE

1. Paul Ghalioungui, The House of Life: Magic and Medical Science in
Ancient Egypt (New York: Schram Enterprises Ltd., 1974).

2. Saint Augustine, The City of God (New York: Oxford University Press,
1963).

3. Arnold Toynbee, A Study of History (New York: Oxford University
Press, 1935).

4. Martin Green, Children of the Sun: A Narrative of Decadence in
England After 1918 (New York: Basic Books, Inc., 1976).

5. See Ronald William Clark, The Huxleys (New York: McGraw-Hill,
1968).

6. Helena P. Blavatsky, Isis Unveiled, A Master Key to the Mysteries of
Ancient and Modern Science and Theology (Los Angeles: Theosophy Co.,
1931).

7. Francis King, Sexuality, Magic and Perversion (New York: Citadel,
1974), p. 118.

8. Sybille Bedford, Aldous Huxley: A Biography (New York: Alfred A.
Knopf and Harper & Row, 1974).

9. Ibid.

10. Institute for Policy Studies, "The First Ten Years, 1963-1973,"
Washington, D.C., 1974.

11. Humphrey Osmond, Understanding Understanding (New York:
Haiper & Row, 1974).

12. RAND Catalogue of Documents.

13. Gregory Bateson, Steps to the Ecology of the Mind (New York:
Chandler, 1972).

14. Ralph Metzner, The Ecstatic Adventure (New York: Macmillan,
1968).

15. See Ronald William Clark, The Huxleys (New York: McGraw-Hill,
1968).

16. Michael Minnicino, "Low Intensity Operations: The Reesian Theory
of War," The Campaigner (April, 1974).

17. R.D. Laing et al., The Dialectics of Liberation (London: Tavistock
Press. 1967).

18. Theodor Adorno was a leading professor at the Frankfurt School of
Social Research in Germany, founded by the British Fabian Society. A
collaborator of twelve-tone formalist and British intelligence operative,

380

DOPE, INC.

Arnold Schonberg, Adorno was brough into the United States in 1939 to
head up the Princeton Radio Research Project. The explicit aim of this
project, as stated in Adorno's Introduction to the Sociology of Music, was
to program a mass "musical" culture that would steadily degrade its
consumers. Punk rock is, in the most direct sense, the ultimate result of
Adorno's work.

19. Theodor Adorno, Introduction to the Sociology of Music (New York:
Seabury Press, 1976).

20. Paul Hirsch, "The Structure of the Popular Music Industry: The
Filtering Process by Which Records are Preselected for Public Consump¬
tion," Institute for Social Research's Survey Research Center Mono¬
graph, 1969.

21. Ronald W. Clark, The Life of Bertrand Russell (New York: Alfred A.
Knopf, 1976), p. 457.

22. Illinois Crime Commission Report, 1969. The Institute for Policy

Studies (IPS) was established in 1963 by Marcus Raskin, a former

National Security Advisor under NSC Director McGeorge Bundy, and
Richard Barnet, a former State Department Advisor on Arms Control

and Disarmament. Among the Board of Trustees of IPS were Thurmond
Arnold, James Warburg, Philip Stern, and Hans Morgenthau, with seed
money from the Ford Foundation (later to be headed by McGeorge
Bundy). IPS has functioned as the "New Left" think tank and control
center for local community control, community mental health centers
and direct terrorist organizations. In its report "The First Ten Years,"

the Institute lists among its lecturers and fellows members of the

Weathermen group, known associates of the Japanese Red Army, the
Puerto Rican terrorist Armed Forces of National Liberation (FALN),
and the Black Liberation Army. See also Carter and the Party of Inter¬
national Terrorism, Special Report by the U.S. Labor Party, August, 1976.

23. Mary Jo Warth, "The Story of Acid Profiteers," Village Voice,
August 22,1974.

24. Ibid.

25. Ibid.

26. Ibid.

27. Hutchinson, Vesco.

PARTV

The Drug Lobby:

The Criminals Come
Out in the Open

In California, laws are now before the state legislature that
would decriminalize all drug use on the grounds that this would
free law enforcement and judicial agencies to deal with "more
serious crime." The sponsor of that bill is State Representative
Willie Brown, a paid lobbyist for Resorts International.

That's the tip-off to the real nature of the Drug Lobby. Britain's
secret army of organized crime is now out in the open demanding
the expansion of its dope market.

Since 1973, when Watergate finished off Nixon's attempt to shut
down the drug trade, the Drug Lobby has succeeded in decrim¬
inalizing marijuana in nine states. In every case, the result has
been an immediate outbreak of drug abuse of epidemic
proportions. According to Dr. Peter Bensinger, Director of the
Drug Enforcement Administration, the decriminalization of
marijuana in the state of Maine additionally opened the coastal
area as a major smuggling center for marijuana, cocaine, and
heroin.

By the open admission of the Drug Lobbyists, legalized
proliferation of marijuana is just the foot-in-the-door for eventual

383

384

DOPE, INC.

legal cocaine and heroin proliferation. Dr. Peter Bourne, who

until 1978 was President Carter's special advisor on drug abuse,
making him the highest ranking federal drug enforcement

officer, has appeared on nationwide television to advocate
national legalization of cocaine.

A systematic campaign to legalize heroin use has been under¬
way since 1977. A bill was placed before the state legislature of
Ohio and narrowly defeated in committee in 1977 removing

heroin from the list of Category I drugs (those drugs outlawed for
even medical use). New Mexico and Florida — both states identi¬
fied by the DEA as major distribution points for heroin — have
bills presently pending that would, like the Ohio bill, legalize the
use of heroin under medical supervision in cases of terminal ill¬
ness and for "experimental purposes." When a similar bill was
briefly enacted in New York (in 1919, coincident with Prohibi¬
tion) , the widely documented consequences were an immediate
jump in heroin addiction, far in excess of the number of "official¬
ly registered" patients.

At present, two Zionist Lobby sponsored bills are before the

U.S. Congress that would nationally legalize marijuana: the
Javits-Koch bill and the Kennedy-authored S.1437 which thor¬
oughly overhauls the Federal Criminal Codes on a British "com¬
mon law" basis.

Kennedy's drug-death Cult

The U.S. Drug lobby is run out front by the Most Venerable
Military and Hospitaller Order of St. John of Jerusalem.

In the 11th century, the Knights-Hospitallers had organized
hospices as a "death cult" where the sick were administered
hallucinogenic drugs instead of medical treatment. The hospices
became known as the dissemination point for drugs and lethal
poisons, often targeted at the Knights' humanist adversaries.

In 1967, the Order of St. John resurrected the 11th century hos¬
pice movement at St. Christopher's Hospice in London. Here,
"patients" are administered a "pain-killer" called the Brompton
Mixture. It consists of heroin, cocaine, alcohol, tranquilizers, and

THE DRUG LOBBY

385

chloroform water. It is administered every three hours — until
the patient dies. (1)

In 1977, the Order of St. John launched a hospice movement in
the United States. It advocates the decriminalization of heroin
and cocaine — on the "humanitarian" grounds that everyone has
the human right to die as he or she sees fit.

To propagate the hospice movement here, the Order founded
the National Committee on the Treatment of Intractable Pain
(NCTIP). Its honorary chairman is Lady Mary Ward, a British
specialist in the hospice movement who founded Hospice, Inc. in
Connecticut as the first operating "death clinic" in the U.S. The
director of the NCTIP is another British national, Arthur
Trebach. A professor at the Center for the Administration of Jus-
tice at the American University in Washington, D.C., Trebach is
also the Director of the Institute on Drugs, Crime and lustice in
Britain. For the past five years, Trebach has sponsored hundreds
of U.S. medical students, professional physicians, and others for
special indoctrination sessions at the Imperial College of Science
and Technology, University of London. The theme of the session
is the "success" of Britain's policy of legalizing heroin in curbing
the illegal drug problem. (2)

In the United States, the Hospice, Inc. is financed by the Kaiser
Foundation, which includes on its board Kingman Brewster, cur¬
rent U.S. Ambassador to the Court of St. James and also a mem¬
ber of the Order of St. John. The Kaiser Foundation's participa¬
tion in Britain's Opium War dates back to at least 1958, when Dr.
Timothy Leary conducted his first experiments with LSD at the
Foundation's Kaiser Experimental Hospital in San Francisco.

The other institution currently involved in financing the
hospice project is the Joseph and Rose Kennedy Institute for the
Study of Human Reproduction and Bioethics at Georgetown Uni-
veristy. (3)

In October, 1978, the first annual National Hospice Organizing
Meeting took place in Washington, D.C.; the two keynote
speakers were Senator Edward Kennedy, now chairman of the
Senate Judiciary Committee and a ranking member of the Senate
Public Health Committee, and Secretary of Health, Education
and Welfare Joseph Califano.

386

DOPE, INC.

The Order of St. John also maintains significant influence on
the board of directors of the Ford Foundation, the world's largest
tax exempt funding conduit for dionysian cults. On the board are
John Loudon, a Commander in the Knights of St. John, the
chairman of Royal Dutch Shell, and the present President of the
World Wildlife Fund (the funding conduit for the terrorist com¬
ponent of the environmentalist movement worldwide) (4) and
Eugene Black, another Knight and former director of the World
Bank. The foundation's current policy thrust was charted during
the 1951-54 period when its associate director and policy
formulator was Knights Commander Robert M. Hutchins, whom
we met earlier as a controller of the Capone mob.

The Ford Foundation gives multimillion dollar annual grants
directly to the Royal Institute of International Affairs; it is also
the principal funder of the Drug Lobby in the U.S. In 1972, the
Foundation established the Drug Abuse Council with a $1 million
war chest which has been refilled every year since. (5)

As its first public act, the Drug Abuse Council issued a widely
circulated report advocating the decriminalization of marijuana,
a tenfold increase in methadone (synthetic heroin) clinics, and
the British system of legalized government-sponsored heroin ad¬
diction. Following the release of that report, the Kaiser Founda¬
tion and the Commonwealth Fund established a matching fund
that more than doubled the annual revenues available to the
Drug Abuse Council to push drug legalization.

Jacob Javits and organized crime

From this level down, the so-called "liberal" drug decriminal¬
ization lobby is thoroughly interlocked with organized crime, by
those forces whose monetary interest lies in the expansion of the
drug market.

The interlock is keyed around the Zionist Lobby, and more pre¬
cisely around the person of Senator Jacob Javits (R-N.Y.).

It has been reported by several knowledgeable sources that
Senator Javits gets his orders several times a week at private

THE DRUG LOBBY

387

planning briefing sessions at a number of exclusive New York

City apartments. Among those present are Arthur Ross of
London's International Institute for Strategic Studies and a sub¬

agent of Rio Tinto Zinc's Mark Turner, Rio Tinto Zinc's Sam
Harris, Nahum Bernstein of the Jerusalem Foundation, and
Warburg, Pincus's Henry Simon Bloch. This, in turn, is the same

circle that maintains ownership of the Bronfman family.

Startling evidence of this Bronfman-Javits relationship
surfaced in 1977 when bribery and extortion were employed to
pass a marijuana decriminalization bill through the New York

State Legislature and to subsequently cover up the findings of a
legislative investigating committee that showed a 300 percent
jump in adolescent marijuana abuse in the state following
decrim. As the sponsor since 1968 of legislation to federally
decriminalize marijuana, Javits (along with cosponsor Edward
Koch, now Mayor of New York City) was the most outspoken
organizer for the New York State marijuana legalization bill.

During the 1977 legislative session, the bill was defeated. In an
unprecedented move pushed by the senior U.S. Senator, Gover¬
nor Carey personally conducted a pressure campaign on behalf
of a reintroduced version of the same bill, which passed by one
vote in June, 1977. The decisive vote was cast by a severely ill
hospitalized member of the legislature who was helicoptered
back and forth from his sickbed by state police on personal

orders from the Governor.

These extraordinary measures were perhaps clarified several
weeks later when Edgar Bronfman made a personal "loan" to
Carey of $350,000 to pay off the Governor's outstanding 1974 cam¬
paign debts. The loan was in violation of state and federal cam¬
paign financing laws.

Like the Bronfman family itself, Javits’s direct connections to
organized crime and drug trafficking run deep. According to affi¬
davits on file from the Internal Revenue Service and the Secur¬
ities and Exchange Commission, Javits functions as a listening

post and conduit of classified government information for the

Lansky syndicate.

In one recently publicized incident, Javits provided Lansky and
other crime figures with information on IRS moves to secretly

388

DOPE, INC.

shut down a multibillion dollar tax loophole that enabled mob in¬
vestors in the domestic coal industry to claim 500 percent tax
writeoffs on their investments. Through Javits's "tip" Lansky
and Co. made a huge, final move to take over the independent coal
operators 24 hours before the new codes went into effect. Another
crime figure implicated in the coal industry killing was Richard
L. Herring, a Georgia-based intermediary of Robert Vesco. In ad¬
dition to his involvement in the creation of the offshore Caribbean
"dirty money" apparatus through Investors Overseas Services,
Vesco is a known collaborator of Lansky's in running the Carib¬
bean Silver Triangle drug traffic in heroin, cocaine, and mari¬
juana. (6)

Javits's links to Lansky and Vesco surfaced in yet another con¬
text in October, 1978. After a several ton marijuana bust off the
coast of Massachusetts, the defendants were represented in court
by lames Lawson, the head of the state chapter of the National
Organization for the Reform of Marijuana Laws (NORML).
NORML is the principal public lobby for the decriminalization of
marijuana and addictive drugs in the U.S. Sitting on its Advisory
Board is Sen. Jacob Javits. Evidence surfaced in the course of
the trial that the front money for the captured marijuana ship¬
ment had been provided by Meyer Lansky and Robert Vesco. (7)

Should there be any lingering doubt in the reader's mind that
Javits is a witting conspirator in the campaign to poison the coun¬
try through drugs, the following should be considered. From 1940
to 1942 Javits was the Assistant to the Chief of Chemical Warfare,
Office of Strategic Services. From 1954 to 1956, as New York State
Attorney General, Javits administered a clandestine experiment
on the effects of LSD in conjunction with the Central Intelligence
Agency. At least one active duty military officer died as the
result of being given an unsolicited dose of LSD — an incident
which Javits covered up and which only came to light through re¬
cent Freedom of Information Act disclosures. (8)

Javits is, of course, the unofficial public head of the Zionist
Lobby in the United States. He is the National Chairman of the
Anti-Defamation League of B'nai B'rith, and a board member of
the American Jewish Committee, the Zionist Organization of
America, and the Amer-Israel Cultural Foundation.

THE DRUG LOBBY

389

Kennedy's NORML

Next to Jacob Javits, the most outspoken drug lobbyist in
Washington, D.C. is Senator Edward Kennedy, the sponsor of the
other pending marijuana decriminalization bill. As the new

chairman of the Senate Judiciary Committee, Kennedy has
necessarily steered away from Javits's open lobbying posture on
behalf of drugs in order to maintain a modicum of credibility
among the powerful law enforcement lobby. Yet the Kennedy
family is directly represented on NORML's advisory board by
ex-brother-in-law Peter Lawford.

Like Javits, Kennedy too is up to his neck in Lansky-Vesco
offshore criminal activities. At the top of Kennedy's 1976 cam¬
paign contributors list is Joseph Linsey, a leading Zionist Lobby
"philanthropist," who is also known as the kingpin of organized

crime in New England. Linsey is a business partner of Meyer

Lansky in the International Airport Hotel Distributing, Inc.

The Kennedy fortunes are even more directly linked to Lansky
through the already documented Resorts International-Intertel
interface. Nowhere is this interface more evident than in New
Jersey, where a combination of Justice Department "water¬
gating specialists" teamed with a $1 million Resorts Internation¬
al lobbying and payoff campaign to legalize casino gambling.

New Jersey Governor Brendan Byrne, who was recruited out of
the Essex County Prosecutor's office by the Kennedy Justice
hands and installed in the Governor's mansion, is a nationally

prominent spokesman for drug decriminalization. As Chairman
of the Law Enforcement Assistance Administration (LEAA)
National Advisory Committee on Criminal Justice Standards and
Goals, Byrne commissioned a series of studies supporting
decriminalization of marijuana and casino gambling.

NORML, the clearinghouse organization for the various local
dionysian cults and Zionist Lobby "liberal" legislators, is itself a
thinly veiled cover through which the poisoning influence of or¬
ganized crime is extended into the high schools and neighbor¬
hoods of the country. NORML is virtually indistinguishable from
the drug cult-pornographic magazine High Times, which boasts a

390

DOPE, INC.

several hundred thousand circulation predominantly among high
school age drug users. The magazine features dozens of pages of
advertisements for drug paraphernalia, instructions on the pro¬
duction and use of legal and illicit drugs, and pornographic photo¬
graphs and interviews with various "high priests" of the drug-
rock cult. Through the revenues of High Times, through an aver¬
age of $100,000 per year in tax exempt grants from the Playboy
Foundation, and through "frequent anonymous contributions
from drug dealers," NORML is financed. (9)

The Advisory Board of NORML includes (in addition to Javits
and Peter Lawford): Max Palevsky, chairman of the board of the
Xerox Corporation; Hugh Hefner, owner of Playboy Enterprises,
Inc.; William F. Buckley Jr.; Burton Joseph, Director of the
Playboy Foundation; Canon Walter D. Dennis of the Cathedral of
St. John the Divine in New York City, the " temple and head¬
quarters" of the Order of St. John of Jerusalem in the United
States; and Stewart Mott, heir to the General Motors fortune.

NORML's general counsels Michael Kennedy and Gerald
Lefcourt, are also connected to terrorism through their defense
of the Puerto Rican FALN (Armed Forces for National
Liberation) and Weatherunderground leader Mark Rudd.

Notes

THE DRUG LOBBY

391

V. THE DRUG LOBBY

1. Karen Steinherz and Marie Mendez, "The Hospice Movement -
Taking the Pain Out of Genocide," New Solidarity, Vol. IX, No. 62,
October 6, 1978. See also Sandol Stoddard, The Hospice Movement
(Briarcliff Manor, New York: Stein & Day, 1978).

2. Seminar listings for the Fifth Institute on Drugs, Crime and Justice in
Britain, held in London in July 1978. The Institute has held five such

annual conferences at the Imperial College of the University of London,
bringing American university students and American public health
officials to study drug abuse in Britain and the "British Model" of treat¬
ment.

3. Steinherz and Mendez, op. cit.

4. Who's Who in America (Chicago: Marquis, 1974); Annual Reports of
the World Wildlife Fund of America, 1976 and 1977; see also. The
Foundation Directory, 5th Edition (New York: The Foundation Center).

5. Ford Foundation Annual Reports, 1972-78, and The Drug Abuse Council
Annual Reports, 1972-77.

6. NBC-TV News broadcast transcript, "Coal Fraud," Reporters Ross
and Silverman, September, 1978.

7. Federal District Court Records of the First Circuit Court, Boston,
Massachusetts. Additional information was provided on drug charges by
New England-based officials of the Drug Enforcement Administration in
September, 1978.

8. In 1976, following Congressional hearings into the intelligences com¬
munity, the files pertaining to the Central Intelligence Agency's MK-
ULTRA, BLUEBIRD and ARTICHOKE programs were released to the
public. The FOIA documents reveal extensive details of the CIA and
Army's experiments with mind control techniques including LSD. In 1977,
Renee J. Roberts, the daughter of Harold Bauer who died as the result of
a dosage of a hallucinogenic drug administered to him at the New York
State Psychiatric Institute as part of an Army-contracted experiment,
began a civil damages suit against offiicials responsible for failing to
investigate the circumstances of her father's death. Sen. Jacob Javits is a
defendant in that suit, stemming from his position as New York State
Attorney General at the time of Bauer's death.

9. Interview with Keith Stroup, Playboy Magazine, 1978; see also issues
of NORML Newsletter describing anonymous contributions.

Epilogue

On October 18,1978, the authors of this book met in Washington,
D.C., with eight officials of the Federal Reserve Board of
Governors, including Mr. John E. Ryan, director of Banking
Supervision and Regulation, and Mr. Robert Mannion, director of
the Board of Governors' legal department. Present were two
lawyers for the Hongkong and Shanghai Bank, including the
HongShang’s chief legal counsel in the United States, Mr. Steuart
L. Pittman. At this meeting, the authors presented evidence
incriminating the HongShang in the international narcotics

traffic and argued that the Federal Reserve should block
HongShang's proposed acquisition of 51 percent of the shares of
the $20 billion Marine Midland Bank of New York. On October 25,
a similar meeting was held with officials of the New York State
Banking Authority, including New York State Deputy Super¬

intendent of Banking William Heany.

Also, portions of the manuscript have circulated in photostat

form for several weeks prior to publication through the State
Department, Treasury Department, Drug Enforcement Admin¬
istration, and related enforcement and regulatory agencies.

In public meetings and radio and television appearances in a
dozen cities in the United States, the authors have outlined the
contents of this book before a broad and diverse audience.
Through these various channels, word has gotten out.

Most readers will have asked themselves the question that the
authors have been asked often in the course of this report's

preparation: "How will the powerful men who stand behind the
narcotics traffic react to this exposure?" The answer is already
evident, at least in part. On November 11, European collab-

393

394

DOPE, INC.

orators of the U.S. Labor Party team conducted a public
meeting in Paris to present the results of the investigation. The
meeting was attacked by 20 hooded and armed members of the
fascist organization, Betar. French police were on guard and
prevented injuries to members of the audience, but one
policeman was injured by the assault. The French authorities
believe that the attack was ordered by the Mossad, Israel's
foreign secret service. The Betar was founded in the 1930s by
Yakob Jabotinsky, a Polish Zionist who modeled himself on
Benito Mussolini, and who was the mentor of present Israeli
Prime Minister Menachem Begin. Undoubtedly, the decision to
launch an attack against not only the collaborators of the
authors, but the French police — who know well how to deal with
such matters — indicates a great fear in the perpetrators of the
narcotics traffic.

What this report has intersected, however, goes far beyond the
petty thuggery of the Mossad. Discreetly, officials of the
HongShang warned the authors shortly after the cited meetings
in Washington what would happen to the United States if they
persisted: "You know, of course," an official said, "that the
British government has made representations to the American
authorities on behalf of the HongShang, which is after all a
British bank. American banks have had pretty much a free run of
it all in London, and we British rather feel that we should have
the same privileges here. If the American authorities give us any
trouble, the Bank of England will start exhuming skeletons from
the closets of the American banks."

In fact, the British had already surfaced an undercover agent in
New York's Citibank in mid-July, a junior official named David
Edwards, who sued the bank for $14 million and made numerous
allegations of illegal money transfer operations. Recently, after
the HongShang official made the statement quoted above, the
Edwards case has taken a new turn. On November 5, Katharin
Graham's Washington Post added major new expose material to
Edwards's original allegations, citing its own sources inside
Citibank. The authors have learned that Katharin Graham is
personally directing Edwards's appearances before one Senate
and three House of Representatives committees.

EPILOGUE

395

Coming at a time when the British banks are making a massed
bid to acquire American banking assets, the inside-outside job
against Citibank is ominous. Apart from the HongShang's cited
plan to acquire Marine Midland, the Canadian Bank of Montreal
wants to buy out 81 retail branches of New York's Bankers Trust;
Standard and Chartered Bank wants to buy up the $3 billion
Union Bank of Caliornia; and buy-out attempts or branch office
openings are in the works involving Barclays Bank, National
Westminster Bank, Bank Leumi, Bank Hapoalim, and other
financial institutions implicated in the world narcotics traffic. An
invasion is on against the already weakened American monetary
system, and the evidence suggests that the British dope-runners
are deliberately seeking to destabilize American banks to further
this invasion.

Apart from the dirty tricks operations aimed at American
banks, numerous other attempts will emerge from the dope-traf¬
fickers to cushion themselves from the impact of this report.
Lower-level operatives, expendable portions of the network may
be sacrificed, the way that assassins like Lee Harvey Oswald or
Sirhan Sirhan were sacrificed by their masters.

But the enemy cannot recoup what it has lost. The $200 billion
dope trade cannot be hidden; it can only be protected through
misdirection. The web of lies now hangs in tatters. If the
American public forces its legislators and law enforcement
officials to act. Dope, Inc.'s defense will no longer avail. The first
blood has already been drawn from a group of gentlemen who
have been long accustomed to working at a distance from the
combat zone. The terms of the battle have been redrawn to make
an American victory possible.

Konstandinos Kalimtgis
David Goldman
Jeffrey Steinberg

New York City
November 17,1978